BOROSIL RENEWABLES LTD (BORORENE) Q3 FY23 Earnings Concall Transcript

BOROSIL RENEWABLES LTD (NSE:BORORENE) Q3 FY23 Earnings Concall dated Feb. 14, 2023.

Corporate Participants:

P. K. Kheruka — Executive Chairman

Ashok Jain — Whole-time Director

Analysts:

Jiten Rushi — Axis Capital Limited — Analyst

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

Unidentified Participant — — Analyst

Anuj Upadhyay — HDFC Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 FY ’23 Earnings Conference Call of Borosil Renewables Limited, hosted by Axis Capital Limited. [Operator Instructions]

I now hand the conference over to Mr. Jiten Rushi from Axis Capital Limited. Thank you and over to you, sir.

Jiten Rushi — Axis Capital Limited — Analyst

Thank you, Michelle. On behalf of Axis Capital, I am pleased to welcome you all to the Borosil Renewables Q3 FY ’23 earnings conference call. We have with us the management team of Borosil Renewables, represented by P. K. Kheruka, Executive Chairman; Mr. Ashok Jain, Whole-Time Director; Mr. Sunil Roongta, Chief Financial Officer; and Mr. Swapnil Walunj, Head of Marketing.

We will begin with opening remarks from the management followed by an interactive Q&A session. Thank you and over to you, sir.

P. K. Kheruka — Executive Chairman

Good afternoon, and welcome to the Borosil Renewables third quarter FY ’23 investor call. The board of Borosil Renewables on 13th February approved the company’s financial results for the third quarter and nine months ended on 31st December 2022. Our results and an updated presentation have been sent to the stock exchanges and have been uploaded on the company’s website. We will discuss the operations of Borosil Renewables on a standalone basis. I will thereafter provide you some highlights of the operations in a newly formed acquired overseas subsidiaries.

During the third quarter, the company recorded net revenue from operations at INR161 crores, a decline of 4% over quarter three FY ’22. So, overall, domestic demand for solar glass has remained strong as the manufacturing of domestic modules for local C as well as for exports increased. This additional demand has been met through higher imports owing to limited availability of domestic manufacturing capacity and hence the estimated market share of Borosil Renewables in domestic markets currently has come down to about 19%.

Export sales during the third quarter, current financial year according to — including to customers in SEZ were Higher at INR58 crores, comprising 35.9% of the turnover, as against 26.5% in the same quarter last year. Average prices of solar tempered glass during the last quarter were about INR134.3 rupees per millimeter — square meter, a decline of 5% over the similar quarter in the previous year and a decline of 4% over the previous quarter of the current financial year. The price decline was a result of discontinuation of anti-dumping duty on the import of solar glass from China, with effect from 17th August 2022, as also a steel production in ocean freight rates both leading to a lower landed cost of imports into India, which is generally [Technical Issues] for domestic pricing.

The company was able to contain the decline in average price by following a strategy to cut low-priced domestic volumes and raise exports which are at higher prices. Post 17th August 2022, there is no anti-dumping duty on imports of solar glass, which continue to enjoy an exemption from payment of basic customs duty as well for the last 24 years. Ironically, solar glass is the only component in the entire solar photovoltaic value chain, which has no import duty whatsoever, though it is the most capital-intensive [Indecipherable] with a low asset turnover ratio. This leads to a complete absence of level-playing field for domestic manufacturing of solar glass against heavily subsidized and dumped Chinese imports.

During quarter three of the current financial year, the company earned an EBITDA of INR43.1 crores. The EBITDA margin at 26.7% which was almost at the same level as in quarter two FY ’23, although the same was about 1,800 basis points lower compared to the same quarter last year, following to decline is in average selling prices and rise in the cost of raw materials and energy. The EBITDA on one hand includes INR9.8 crores income on account of exchange rate difference and interest income on loans given to the overseas subsidiaries. The EBITDA excludes an amount of INR6.6 crores being profit carried forward due to reversal of sale compared to such exclusion of INR3.2 crores in the same quarter last year, owing to accounting treatment under Ind-AS. Thus, comparable EBITDA without these impacts would be INR36.7 crores, that is to say about 22.7% of net revenues.

During quarter three of the current year, the company earned a profit before tax of INR30.1 crores. The profit after tax was INR22.5 crores as compared to INR45.7 crores during the same quarter last year, a decline of 51%. For the nine months ended December 2022, the company clocked a revenue of INR500.6 crores, a growth of 8% over corresponding nine months of the previous financial year. The company earned an EBITDA of INR138.5 crores, a margin of 27.7% and a profit after tax of INR76.9 crores, i.e. a PAT margin of 15.4%.

Commissioning of 10 megawatt captive power plant of solar plus wind energy being set up to an SPV in which BRL has 31% shareholding, which was planned in December 2022 has been delayed and is expected to come on stream from April 2023 after receiving relevant approvals from state authorities. We will be able to increase use of green power in our manufacturing as also reducing the average power cost. We are also looking to set up an additional 8 megawatt solar plus wind power plant once there is enough clarity on the regulations. The overall demand situation for solar glass continues to look extremely robust in India and we expect huge increase in the module manufacturing capacity as the new plants are getting added.

The domestic module manufacturing capacities are expected to rise to 65 gigawatts from about 25 gigawatts currently, which will increase the demand to 3 times from the present levels in next two to three years. The Union Budget 2023 had many announcements with the growth of renewable energy sector in India and a few of them are as follows: allocation to MNRE of INR10,222 crores for financial year ’24, which is about 45% higher compared to the previous year. INR19,000 crores for National Green Hydrogen Mission, which aims to achieve 5 MMT production by 2030. INR35,000 crores for clarity capital investments towards energy transition and net zero objectives and energy security by MoPNG. INR20,700 crores for interstate transmission system, for evacuation and green integration of 13 gigawatts renewable energy from Ladakh.

I’m happy to share that trial production from our third furnace SG3 has started from 26 January 2023. The furnace is under stabilization and we expect commercial production to begin soon. Our capacity has now risen to 1,000 tonnes per day, 6 gigawatts from 450 tonnes per day. With this, we will be in a position to more than double our sales and also achieve some operating leverages. The recently acquired German plant has added an operating range of 300 tonnes per day to BRL’s manufacturing capacity and also widened this range of offerings, including various fixtures, coatings, dimensions and thickness. And is bringing in synergies in manufacturing and sales operations in India and Europe.

The plant is operating at about 95% of capacity. Cold repair of this furnace will be carried out during March and April over 45 days and thereafter the furnace will be put back into production. We’re also executing the capex spend for raising production capacity along with debottlenecking, a new machinery is to increase efficiencies and also achieve capability to supply larger size glass and make the processes more efficient. And the overall capex of EUR34 million will be incurred on this, of which EUR9 million has already been done from internal funds.

The consolidated results for the quarter and nine months including the operations of Interfloat Group from acquisition to 31st December 2022, as also the wholly-owned subsidiaries abroad. The Interfloat Group registered a revenue of INR84.36 crores, equivalent [Indecipherable] EBITDA of INR6.3 crores registering an EBITDA margin of 7.4%. We see we were able to achieve despite extremely high energy and raw material prices. The consolidated net revenue and EBITDA stands at INR246 crores and INR28.5 crores respectively. The EBITDA is net of acquisition expenses of INR18.84 crores debited in the profit, loss account of the two overseas holding companies.

With the announcement of the Green Deal Industrial Plan by European Union implementation of Inflation Act in USA and favorable policy and fiscal support for domestic solar module manufacturing in Turkey, the technology development and solar module manufacturing activity is expected to substantially increase in these overseas markets. As a result of this export demand for solar glass continues to look extremely robust, we see growth opportunities for meeting this requirement. Most nations are trying to raise domestic production of solar cells and modules and also trying to reduce dependence on Southeast Asia, which places India in an advantageous position for exports. Our step of having manufacturing in Europe complements well with expanding production in India to meet a higher demand in export markets.

With that, I would now like to open the floor to questions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] The first question is from the line of Nikhil Bianca from DAM Capital. Please go ahead.

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

Hello?

P. K. Kheruka — Executive Chairman

Hello.

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

Yes sir. This is Mohit Kumar from DAM Capital, sir, few question on my side, sir. First is on the, of course, we have this new cell and module capacity which is coming up. Can you just change the capacity utilization to be muted and rise gradually over next few quarters or do you think we’ll be able to update at a much higher capacity from Q1 FY ’24?

P. K. Kheruka — Executive Chairman

I’ll ask Mr. Ashok Jain to respond to this question.

Ashok Jain — Whole-time Director

So the — as we speak, the current manufacturing is almost 10 gigawatts to 11 gigawatts in the country modules, because SSDs are end up already, the module manufacturing capacity in the country [Indecipherable] gigawatts and the activity is going up. Yes, you’re right that solar cell manufacturing capacity is still no and the new capacities are to be still added in the forthcoming future but imported solar sales are being used by domestic manufacturing. So we believe that this expanded capacity though will take time, it will not be a bottleneck in terms of using the module capacity.

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

So can I expect to have a [Indecipherable] ramp-up or you’re expecting the full ramp-up for the first quarter itself.

P. K. Kheruka — Executive Chairman

For the furnace, you are saying.

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

Yes, sir for furnace.

P. K. Kheruka — Executive Chairman

Furnace, we will ramp up immediately as soon as we get the production to write efficiencies and all, we will ramp up — ramp it up. Last time when we commissioned our furnace in 2019, we could do so in about a month’s time. So we would like to do it. First is possible because the demand exists and we’d like to sell more quantities.

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

And sir, related question is that, has there been any new cell and module capacity which has come up CYT in last few quarters, new sir. And Adani capacity is up and running, anything else sir on the —

P. K. Kheruka — Executive Chairman

Module capacity is a lot of capacities have got added, particularly by worry energies, large capacities have been added as you may know, they are almost at 9 gigawatt now as compared to 3 gigawatt, 3.5 gigawatt, they were about six months or eight months back. So they have added huge capacity. The other people also have gradually added capacities, but this is by far the biggest capacity which has generated. In terms of the solar cell manufacturing, nothing substantial has been added, except Adani.

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

Understood, sir. Last year, sir, the export sales have increased during the quarter and is meaningful contribution has gone. Is it entirely exposed to Europe right now and are you seeing any new inquiries from the Europe for tying up the — for tying up some incremental capacities?

P. K. Kheruka — Executive Chairman

So exports are you’re right through January to Europe and also to Turkey. Turkey also happens to be very fast-growing market. And there are lot of new plants also coming up in Turkey adding capacities and existing module manufacturers are also adding capacities. So there is a large market in Turkey. In Europe also growth is happening and we are getting inquiries from existing as well as new customers there.

Mohit Kumar — DAM Capital Advisors Ltd — Analyst

Understood, sir. Thank you and all the best, sir. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Balamuralikrishna, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Good afternoon, sir. Sir, I want to know that the Europe margins are very low. So how long it will be — with some time 5% EBITDA margins are continuing.

P. K. Kheruka — Executive Chairman

So, European margins when we acquired the plant, I mean, when we started to look at the opportunity, the margins were running high, but as you all know, the Russian — Russia and Ukraine war has put the gas prices to CDI level that it has become difficult to earn any margins in glass industry in Europe. But fortunately and by efficient working at the German plant-level, we have been able to stay positive in terms of EBITDA margin. As we speak, the gas prices in power — electricity prices have come off quite a bit, the gas prices have come down to almost EUR60 as against EUR150, EUR140 as you would have noticed in last couple of months and also power prices have gone down.

So currently, the situation is better. And we have to live with whatever has happened in 2022. Because the EBITDA margins were only in single-digit about 7% or so we hopefully will be able to do better.

Unidentified Participant — — Analyst

Just a follow-up on this sir. in Q4 or Q1, can we expect some improvement in margins?

P. K. Kheruka — Executive Chairman

Q1 at German plant level, you are saying?

Unidentified Participant — — Analyst

Yeah.

P. K. Kheruka — Executive Chairman

Yes, so we are trying to improve the margins, it’s a continuous exercise and we cannot commit any digits on that, but of course we would like to show a better picture as we close the quarter one.

Unidentified Participant — — Analyst

One more thing sir —

Operator

Sorry to interrupt. Mr. Krishna — Muralikrishna, we are not able to hear you, sir clearly, may we request you to use your handset to ask a question, please?

Unidentified Participant — — Analyst

Yes, I’m using handset only, just to repeat again. Yeah, this quarter we have some significant exporter. So like to know what would be the difference in the realization for the domestic and exports and do we see spend will continue in this quarter itself — in this quarter and upcoming quarters also?

P. K. Kheruka — Executive Chairman

So export and you are asking separate realization for export and domestic, is that your question?

Unidentified Participant — — Analyst

Yes sir, that is the question. And also in Q4 and in upcoming quarters also, can we expect export — more export revenues compared to domestic?

P. K. Kheruka — Executive Chairman

So as far as the export and domestic realization is concerned, it is — the sales are on monthly basis and we cannot be sure of what realization will come for a particular quarter, the prices of course are staying at current levels, so that we can assure you that we will sell at a market price. In terms of the growth in the export market, we are already at 32%, 33% of our sales are going to export market and I think if we maintain that level, it will be quite good. In fact, the percentage level might go down, because now we will have increased production from furnace three which will substantially increase our output available. So our target would be to at least make 25% of the turnover is exports. But the volume would have gone up substantially as the numbers will double.

Unidentified Participant — — Analyst

Thanks a lot, sir. That’s it. I understood.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Jiten Rushi from Axis Capital Limited. Please go ahead.

Jiten Rushi — Axis Capital Limited — Analyst

Thank you for taking my question. The first question from my side is, what proportion of the exports are to location with anti-dumping duty against China and probably how competitive are we in those areas where there isn’t on duty?

P. K. Kheruka — Executive Chairman

So basically there are antidumping duties in Europe and Turkey against China and which are the mix which is wherever it make some exports are there actually and known duty areas like USA and MENA countries, our exports are limited that’s the direct competition from China there and prices are low, so yes. The markets are available to us, where we can really make better margins are Europe and Turkey where we export our maximum volume almost 90%, 95%.

Jiten Rushi — Axis Capital Limited — Analyst

Yeah, we export 90% — 95% Europe and Turkey?

P. K. Kheruka — Executive Chairman

Yes.

Jiten Rushi — Axis Capital Limited — Analyst

Sir, but any — the natural calamity in Turkey will impact our revenue in Q before Q1 what is your view based on the insights that we received in last couple of weeks or 10 days.

P. K. Kheruka — Executive Chairman

Yeah, of course, these things can affect, but we are not depending on one particular area or one particular customer and we have ability to move over. Volumes to different geographies like in India, the demand is quite high. We are able to provide only limited quantity in Indian market compared to what the requirement is. So we have ability to move our volumes to different geographies and different customers.

Ashok Jain — Whole-time Director

We don’t see any impact on the — currently, as you are referring to Turkey’s situation, disruption has been generally in South Turkey, closer to Syria border. All our customers are in Northern area generally and in fact, our team has just visited and completed their visit to Turkey, they come back last week volume or started only and all the plants have been operating there.

Jiten Rushi — Axis Capital Limited — Analyst

And basically we will not see any impact on revenue on.

P. K. Kheruka — Executive Chairman

No, no. In fact we are trying to increase our revenue there.

Jiten Rushi — Axis Capital Limited — Analyst

And sir, probably in this quarter, what would be — what is the export portion, in terms of revenue?

P. K. Kheruka — Executive Chairman

In Q3, our export is about 33%.

Jiten Rushi — Axis Capital Limited — Analyst

And in nine months?

P. K. Kheruka — Executive Chairman

Nine months would be slightly lower. Give me a second, 27.5%.

Jiten Rushi — Axis Capital Limited — Analyst

So sir, is it safe to assume that our margins from India is about 25% on exports it is lower, hence the blended margin is at 24%, 25% so that can be a safe assumption?

P. K. Kheruka — Executive Chairman

Sorry, can you repeat your question?

Jiten Rushi — Axis Capital Limited — Analyst

So what could be the blended margin, so probably margin from India and margin from exports. So what could be the EBITDA margin from this division and what can be the blended margin going forward in terms of guidance?

P. K. Kheruka — Executive Chairman

So our blended margins are shown in the results, which is at about 24%, 25%.

Jiten Rushi — Axis Capital Limited — Analyst

Yes, yes.

P. K. Kheruka — Executive Chairman

And separately, we are not declaring any margins for export and domestic markets.

Jiten Rushi — Axis Capital Limited — Analyst

But is it safe to assume that in domestic, we would be in better margins, higher margins?

P. K. Kheruka — Executive Chairman

It is on the contrary, exports are doing better margins.

Jiten Rushi — Axis Capital Limited — Analyst

Better margins, okay. And sir, so if at all after the removal of anti-dumping duty imports from China and India, what is the net value proposition for our customer in India to buy from Borosil versus importing from China? And what is the pricing difference or any other value that customer will see from buying from Borosil, can you just quantify these things?

P. K. Kheruka — Executive Chairman

So it is difficult to quantify what in a nutshell we can say is that there are more than 100 customers in India, more than 100 module manufacturers, some of them do have imports, as many of them do not have imports. There are almost 15, 20 customers maybe importing and rest are not importing. They buy completely from us. And there are other medium or smaller-scale players, the larger ones do have import as a necessity because our production is not sufficient to meet all the demand.

In terms of the product quality and product servicing and offering, more or less the products are same except that whatever advantage we offer for — from being a local source, that’s an added advantage to the customers where they can have flexibility in ordering and receiving goods, shorter delivery period, warehousing, inventory cost, all those benefits are there for local sourcing. So that’s where the local production comes in.

Jiten Rushi — Axis Capital Limited — Analyst

And, sir, any update on the PLI — second PLI, which has happened in February. Any updates from your — any participation from your side?

P. K. Kheruka — Executive Chairman

No we are not eligible for PLI, only the solar cell module and [Speech Overlap] and that will be probably taking place in the next month.

Jiten Rushi — Axis Capital Limited — Analyst

Next month. Okay sir, that’s it from my side. Thank you and all the best.

P. K. Kheruka — Executive Chairman

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sharan, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Thank you for the opportunity. My first question is, as you were saying like you have challenges with respect to oil and gas prices spiking. So just want to check like whether the furnace can run on green electricity because I read in an article where there are furnaces in some companies, they are running with the green electricity as well. So just wanted to check does your furnaces also can run on electricity, instead of oil and gas?

P. K. Kheruka — Executive Chairman

These are large furnaces, which are basically run on gas or oil only worldwide, only small furnaces are capable of being run on electricity. But these kind of furnaces, of course, run on natural gas or furnace oil or simultaneously they can be operated on any of the — both the fuels. Of course, there is a research and there is a trial going on for using green hydrogen in furnace, which is still a few years away I think, but electricity cannot be used for such large furnaces.

Unidentified Participant — — Analyst

Okay, sure. And — so can you explain the SG4 and SG5 capex timeline, I think it’s already mentioned, but like capex funding basically how much it will be internal and how much it will be the raising the fund via QIP or anything? Also couple of years back, if I remember a long-term investor like they participated in QIP and then later within a year or so they exited. Do you — are you expecting any long-term investors to come in now as part of further expansion in Germany as well as in India for SG4 and SG5? Can you throw some light on that.

P. K. Kheruka — Executive Chairman

So currently, we are — currently we are focusing on stabilizing SG3 commercial production. And once we have started to earn some revenue and profitability from this project, which should happen soon, thereafter we’ll take a stab of the complete situation prevailing in the ecosystem, like what kind of expansions are coming, how the module manufacturing is growing, what kind of duty structures prevail and then we’ve — our board will possibly meet and take a call when to commission — when to start the next round of expansion. So we will come back to you as soon as the Board meets and decides on this particular aspect. Right now we are focusing on SG3 commercial production.

Unidentified Participant — — Analyst

Okay. And what’s the status of the reinvestigation of anti-dumping duty? I think it’s in the Gujarat High Court if I’m not wrong right. And also this year again by August, if there are new players who will start producing the glass locally, means there will be multiple players in India itself. Are there any chances that this year again there will be anti-dumping duty?

P. K. Kheruka — Executive Chairman

Anti-dumping duty had been withdrawn as you know from 17th of August. After that, we have gone to Gujarat High Court by way of writ petition. The writ petition has come for hearing many times, but it has got postponed all the time. The hearing is yet to take place. So we do not see a quick results coming from the — whatever effort, we are making in the High Court. In terms of continuation or a new duty, it’s a complete exercise, the complete data has to be submitted to the Ministry of Commerce that they have to examine, they have to cross examine, they have to seek responses from various stakeholders and it’s a long-drawn process of almost a year. So we have not moved any application for new duty, but the whole duty application has died unless the court instructs finance ministry to revive it.

Unidentified Participant — — Analyst

Sure, yes. My last question is like, as you mentioned and we are all aware, globally, the demand is increasing, for renewable energy and solar, right. And do you see across global, the availability is meeting the requirement or it’s still below the requirement? Like in — mainly like China like they also have the local capacity, local also demand is more right, then they will be able to fulfill local demand and their export will be reducing in future you see, which will be beneficial for — especially for Borosil?

P. K. Kheruka — Executive Chairman

So, China, as you may know, has the biggest capacity of entire solar value chain, in many cases, they control almost 95% like in solar glass, they control, 95%, 97% of the world market. Then in component and other things also, they control almost 90% of the market. In module manufacturing also, they have 75% plus market share in manufacturing. So they obviously dominate the whole thing in solar PV value chain. And unless their domestic demand is quite high, they try to export their extra production to overseas markets which is where the challenge comes in terms of the supply/demand mismatch.

In terms of the module installation last year, the numbers which we have seen are quite good and they are as per the — almost as per the target and next year projections are still very high. So we believe that the demand in ’23 is going to be much better compared to even last year. More than 300 gigawatt of installations are planned for this year worldwide.

Unidentified Participant — — Analyst

Okay. Sure, yeah. Thanks for the time and taking all questions, sir. All the best for the future.

P. K. Kheruka — Executive Chairman

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sumeet Gugnani, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Thank you so much. So I have two questions, one, I understand that your European cold repair furnace will happen in March and April. So is that for two months? And in your last call, you had mentioned that you were planning to substitute or send in products from the domestic market furnace to the existing customers of the European furnace during that period. So has that been qualified or are we going to miss out on sales? That’s the first question.

P. K. Kheruka — Executive Chairman

So, European furnace at GMB is going to be brought down for repair by middle of March, that is the plan. And generally speaking, it should take about 45 days to come back to production. We estimate that time to be maintained, but one is to provide for contingencies, so maybe one or two weeks we may provide more. So that’s how two months is possible, but we’d like to finish it in 45 days.

In terms of the supply of glass from India to customers in Europe at the time of shutdown period, we are working with the team at German plant what quantities for what — which customers who may be required. We also have export to many of the customers, which are common between the two plants and it will be possible to use the glass supplied from India for those customers seamlessly without any further let’s say checking or certification or examination of the quality parameters and all. So that will be done as and when it is required. And in respect of whichever customers it is needed in the month of March and April.

Unidentified Participant — — Analyst

Yeah. Okay, thank you. The second question is regarding the input prices of gas, so both for the domestic supply as well as in Europe, we all know natural gas has been very volatile. So are your contracts fixed or are they variable and if they are fixed for what tenure are they fixed. So they spiked up a lot, now they have come down a lot, so do you buy on a spot basis or do you have a long-term contract typically for domestic and separately for Europe? So there are two questions within that.

P. K. Kheruka — Executive Chairman

So for a plant in India, which is Borosil Renewables plant, we had contracts of guess for five years from — with GAIL under various arrangements. Now those contracts have expired in December ’22, new contracts are yet to be entered, because the prices are still high. What we have done is to mitigate this high-cost of natural gas or say RLNG, we have started to use furnace oil. So for most of our requirements, we are using furnace oil in the glass — in melting the glass in India as of now, which is how we are trying to keep the cost under control. And as and when there is an opportunity to lock in for a short period or medium-term, then we will do that as we go along.

In Germany we have some of buying futures or we have the gas purchase and power purchases, based on the current scenario and future prices available. We keep reviewing that every week or every month, depending on how volatile the market is. Currently, we have certain volume for 2023 and certain volume for 2024 and we keep — after reviewing, we keep increasing the hedge as the situation permits. But there are no fixed contracts in Germany or India as of now.

Unidentified Participant — — Analyst

Got it, thank you. So the furnace oil for the domestic that is working at more cost effective than the spot gas prices or any long-term, mid-term contract that you would sign, currently, is that right?

P. K. Kheruka — Executive Chairman

Yes, yes, absolutely. You’re right.

Unidentified Participant — — Analyst

So why not make that a long-term thing?

P. K. Kheruka — Executive Chairman

See generally, natural gas is preferred fuel for this kind of furnaces, but when it comes to economic viability, then we have to also look at how we match the cost of production and how we remain competitive in the market and that’s why we have taken a decision to use part of the fuel as furnace oil, partly we still use natural gas, but that’s a lesser quantity right now.

Unidentified Participant — — Analyst

Got it. And last question is just on the pricing trends for our product quarter-on-quarter, year-on year in this quarter, what is the trend that you’re seeing in terms of the price of our — the selling price of a glass?

P. K. Kheruka — Executive Chairman

See prices have been generally stable except for the impact of anti-dumping duty withdrawal which has happened in August ’22, so because of that, the landed cost has come down for imports and we had to adjust our prices suitably to match the imported landed price or give price in competition to that. Otherwise, generally the import prices and domestic prices are remaining around the same. I mean around the — they are being stable, there is a gap in domestic pricing. Domestic pricing is higher by 8% to 10% compared to imported landed cost.

Unidentified Participant — — Analyst

So, no, my question was, sir, for the October through December period, the pricing versus the previous quarter, how much lower was it if you mentioned it in the introductory remarks, I might have missed that, because the line wasn’t clear at that time?

P. K. Kheruka — Executive Chairman

No, that was about 5%.

Unidentified Participant — — Analyst

5% decline last quarter over the previous quarter, correct?

P. K. Kheruka — Executive Chairman

Yes, that is because the prices remain same, but because we had to decline it because of the anti-dumping withdrawal, yeah.

Unidentified Participant — — Analyst

Yes, I understand. And this quarter, how is it looking till Feb? Is it — you said, it’s stable, so it’s stable versus what you had in October, November, December, is that right?

P. K. Kheruka — Executive Chairman

Yeah, we can view it that way. That’s right.

Unidentified Participant — — Analyst

Okay, great, thank you. Appreciate your response.

Operator

Thank you. The next question is from the line of Yash Shah, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Hello? Am I audible?

Operator

Yes sir, please proceed.

Unidentified Participant — — Analyst

Yeah. So I would like to know regarding the long-term contracts with any of the customers regarding the price. So do we have any contracts as of now, which are for long-term at fixed prices?

P. K. Kheruka — Executive Chairman

No, the solar glass is being sold on a monthly basis, on a basis of monthly purchase order, there are no long-term contracts.

Unidentified Participant — — Analyst

Okay. And where do we see the EBITDA going on a long-term business, can we maintain at the current level? Because earlier I guess, six to nine months before we have said that we were operating at a pretty high EBITDA levels, which was bound to come down. So are the current levels stable enough, we can expect it to be at this level in the future quarters as well or there is scope for further reduction?

P. K. Kheruka — Executive Chairman

So when the EBITDA levels were high, that time also we had mentioned that these are higher than the normal EBITDA levels because of the situation of high freight and high international prices. And when it came down to almost 30%, there was a level we presume would have been the normal level. But after withdrawal of anti-dumping duty, this 30% expectation has come down slightly. We should look at EBITDA levels between 25%, 30% or thereabouts.

Unidentified Participant — — Analyst

Okay, thank you so much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Anuj Upadhyay from HDFC Securities. Please go ahead. Mr Upadhyay, please proceed with your question. I have unmuted your line, sir.

Anuj Upadhyay — HDFC Securities — Analyst

Yeah, hi sir. Thanks for the opportunity. Am I audible now?

P. K. Kheruka — Executive Chairman

Yes, yes.

Anuj Upadhyay — HDFC Securities — Analyst

Yeah, okay, fine. Sir, this import price or the discounted imported price is sustainable. I mean, I need to understand the things like in your initial remark you mentioned that with the resumption of the domestic module manufacturing thing, [Indecipherable] demand ramp-up happening, currently the glass is more on the imported glass as a result of which the competition has been quite steep and we are taking price cuts. But with the resumption of the domestic module manufacturing say two to three years down the line, would there be any chance of going back to our earlier pricing regime considering the fact that the gases — gas prices have now come down even the freight rates have pulled down a bit? So just need to understand the thought process on that.

And secondly, how are the competition — when I say the competition is the domestic competition, because we have seen many domestic player also coming up with the solar glass manufacturing capacities. We heard of Vishakha coming the capacity addition [Indecipherable]. So now with this discontinuation of the duty, are we seeing similar kind of competition coming into the industry or there has been a hold as of now? That’s it sir.

P. K. Kheruka — Executive Chairman

So actually, as you would understand the market is the determining factor of the prices and demand/supply will drive the prices up or down or maintain the prices at whatever levels. So as it happens with any commodity business. So we have to believe that market forces will decide what prices will prevail. The imported competition or imported prices are one way to benchmark it against which the Indian manufacturers are seeking the prices from us. But when it comes to movement in the prices, you have seen that the prices have moved up very high in 2020 to ’21 and ’22 and they have corrected later on. So this will keep on happening based on demand/supply worldwide, whether China impacts it or India impacts it, this will all be the case.

But in terms of the local manufacturing, there are couple of players who are coming up. These are basically plants being set up as greenfield plant and the cost of those plants is much higher than ours. That’s what our view is or belief is and their cost of production is also going to be higher than ours. So we do not foresee the prices to go down in the time when the local production comes in and in any case we are competing with world’s largest producers right now from China. So these two players who are listed on the exchange are controlling almost 60% of the world market and almost more than 60% of the imports into the country are coming from these two sources based in Malaysia and Vietnam. So these are about Chinese factories.

So we — competition will stay throughout your life for every product and we have to stay positive and we have to stay competitive by controlling our cost by being innovative, by providing customers value for money. That’s how we would look to — would like to look at the solar glass as well.

Anuj Upadhyay — HDFC Securities — Analyst

Yeah, thanks sir. Just a follow-up on, on your last remarks [Phonetic]. Apart from the replacement, I mean, usage of furnace oil, is there any other cost reducing measures which we are adopting, so as to the competitor?

P. K. Kheruka — Executive Chairman

So many — actually the day starts with innovation thought process only the complete mindset of the people in the countries to stay competitive. We have to face the Chinese competition without any help from any corner in the country, be it the government or the any other side of it. And all the Chinese exports are coming to India with lot of subsidies and lot of incentives being rolled out to those manufacturers in those countries. And we have to pay full prices, full cost or we don’t have any duty support or any subsidies for that matter. So the thought process in the company is to be innovative in terms of each aspect of whatever activity they are handling. And that’s how we are trying to — trying to keep our costs under control. So whether it is raw material pricing or furnace oil or say gas consumption in the furnace or use of innovative picking ideas, all those mechanisms are helping us to control our prices, of course, the productivity of the equipment is very high in our case, which are allowing the higher production, higher throughput, which keeps the cost of production quite low.

Anuj Upadhyay — HDFC Securities — Analyst

Okay. And how have been the demand for the Bifacial modules, sir, both the domestic and the export levels?

P. K. Kheruka — Executive Chairman

So Bifacial module, I mean, in China, it is more than 40% already. And in India, now with the new module plants which are coming up having this capability of producing Bifacial modules, this demand is set to rise. Already some players have started to make Bifacial modules in the country, the large ones and gradually this demand will go up. In terms of the overall thinner glass sales, we sell almost 30% of our production as thinner glass, which is into 2 millimeter, 2.5 millimeter and 2.8 millimeter. And we also export 2 millimeter in glass. So we see the — thinner glass is going to ramp up very quickly to very high levels, which is used in Bifacial modules.

Anuj Upadhyay — HDFC Securities — Analyst

Fine sir. So it was almost 30% of our total sales, is my understanding correct?

P. K. Kheruka — Executive Chairman

That is including 2.5 and 2.8, which are not going in Bifacial modules as such. But, we believe 2 millimeter demand, which is in Bifacial, we’ll also raise to double-digits very soon in terms of the composition of overall demand.

Anuj Upadhyay — HDFC Securities — Analyst

Fair enough, sir. So it will be somewhere in the range of 5% to 10%, right sir?

P. K. Kheruka — Executive Chairman

Well, it could be even more than 10%. It all depends on how the module manufacturing plants —

Anuj Upadhyay — HDFC Securities — Analyst

Current one, sir — current sales, I’m referring to the current sales, sir.

P. K. Kheruka — Executive Chairman

Current sales only, I’m talking about our customers because it is the capability of our customers to produce Bifacial modules and they are all setting up new equipment, new module lines which are capable. So how fast they can convert their capacity is through Bifacial, will also be a driving factor how the demand for thinner glass would be.

Anuj Upadhyay — HDFC Securities — Analyst

Fine sir. Thank you.

Operator

Thank you. We have the next question from the line of Kiran Paranjpe, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Yeah, thank you for taking my call. My question is mainly related to our European subsidiary. If I look at it, can you just remind me once again what is our capacity in terms of tonnes per day in India and in Europe?

P. K. Kheruka — Executive Chairman

So, in India, we were operating 450 tonnes per day and now we have 1,000 tonnes per day after our expansion. And in Europe, it is 300 tonnes per day currently.

Unidentified Participant — — Analyst

Okay, okay. So — but if I look at your consolidated number and your standalone number, right, I’m seeing some discrepancy in terms of sales. So does it mean the volume in Europe was down this quarter or the sales prices were down? Because I was expecting much better numbers on top line at least, I understand the cost pressures. But the top line looks muted for this quarter for the three months, so is that a small quarter, part of the quarter or volumes lower, can you throw light on that?

P. K. Kheruka — Executive Chairman

Yes, you are right, actually the acquisition took place only at the end of October. So the consolidation includes results only post acquisition. And this is not a full quarter, only two months sales are reflected in the — from the German plant, that’s why you see the numbers not reflecting a complete picture. Going forward, it will be reflected in the next quarter’s results, the full quarterly sales of German plant. The new plant, which has just got commissioned and which is under commercial production in India, 550 tonne, the sales also will start coming in from this quarter sometime. And you will see that the number is going up from the March quarter itself.

Unidentified Participant — — Analyst

Okay, thanks. Thanks for that clarification. My second question was regarding once again on the European subsidiary, if I look at again difference between consolidated and standalone, on the cost front, I see the cost which is your power and fuel cost or employee costs or other costs they’re almost same as of standalone numbers. So those now being European, we expect them to be on the high side, but I never expected that to be so high typically in power and fuel. Now I understand the gas situation. So can we expect coming quarter because the fuel and gas are going down and you must be doing some rationalization on manpower cost. So can we expect this EBITDA, which we delivered for this quarter to be a bottom and then next all quarters, we’ll continue to see up more on EBITDA levels, on a quarterly basis sequentially?

P. K. Kheruka — Executive Chairman

Yeah, well, that will be the attempt to do. And also, there will be full quarter results in the next quarter, that is another thing. And you are right on the cost front also, there has been lot of softening — lot of softening in the natural gas prices and also electricity prices. All these are one end, another end is that, we are going to put the furnace under cold repair from middle of March. So that for the second half of March, there may not be any furnace production, of course, whatever WIP will be there in terms of [Indecipherable] we’d like to temper it and sell it.

So, March quarter, you will again see slight — maybe slight, it will not be complete picture probably, but going forward, you will see that the situation keeps improving as the quarters go by. Because the gas prices have softened a lot, the cost will be much lower.

Unidentified Participant — — Analyst

Okay, okay, thanks. And my last question is again related to European subsidiary, it was about manpower cost, if I look at the numbers, if I deduct consolidated and standalone, the number for European employee cost comes to about INR18 crores. Now, if that is just for two months, does it mean that it is about INR27 crores for the entire quarter?

P. K. Kheruka — Executive Chairman

Jus a minute.

Unidentified Participant — — Analyst

Yeah.

P. K. Kheruka — Executive Chairman

Yes, so employee cost in Europe is high as you would know because of the structure they have in terms of the cost and just looking at the numbers. Yeah, you’re right, the numbers indicate about INR18 crores for two months.

Unidentified Participant — — Analyst

Yeah, INR18 crores for two months. So that would be roughly about INR27 crores for three months, right, when the next quarter comes in, right?

P. K. Kheruka — Executive Chairman

Yeah.

Unidentified Participant — — Analyst

Okay. And I’m sure you would be working on that to ensure that how it can go down as any Indian company acquires a European company, manpower cost is one of the biggest item of cost and one want to automate or do something about it, right?

P. K. Kheruka — Executive Chairman

You are right, but it is structural in terms of the economic levels of the — geography as you would know. German costs are very high. In terms of the number of people, but you see there is less number of people, quite less, compared to what we use in India. And on the cost front, you have to pay the minimum salaries, minimum wages and also incentivize the people to deliver. So we are of course watching the cost on one side, but we cannot be sure whether this can go down. In fact, we have to increase the productivity and once the production is better, the percentage-wise it will look much better to look at.

Unidentified Participant — — Analyst

Okay, okay. Okay, thanks a lot. Those are my questions.

Operator

Thank you. The next question is from the line of Ashit Kothi, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Thanks for this opportunity. Sir, I would just want to understand, with — other than the government support, with regards to dumping by Chinese companies, how exactly would you be able to compete or — take Chinese companies. Because India as well as Europe, everywhere, China is the major player.

P. K. Kheruka — Executive Chairman

So this is what we have been doing right from the day we started solar glass production actually. The duties have not been significantly favorable for a long period of time. After anti-dumping duty in 2017, the Malaysian plant has started, thereafter Vietnam plant started, so there were no duties against those plants, so a lot of imports shifted to those countries. So, the imports have been affecting the profitability or pricing in the Indian market as well as overseas markets. In terms of how we are able to perform as a management, as a company, you can compare it with the audited and published results or unaudited results of the two listed companies on the Hong Kong Stock Exchange, which is like Xinyi Solar and [Indecipherable].

And if you were to look at those numbers, you will see that our numbers at EBITDA levels are in fact better than them. Despite our being only 4%, 5% of their production size. So we are trying to be innovative. We are trying to control our cost. We are —

Unidentified Participant — — Analyst

So that’s heartening to know —

P. K. Kheruka — Executive Chairman

Sorry, one minute, please. So that’s how we are trying to be trying to be focusing on controlling our costs and in this direction, we have taken another step which is going to be very important to have R&D center within the company, where we were going to constantly work on the technologies and products and processes in order to improve our competitiveness in this field and also develop new products, which could be of importance going forward.

Unidentified Participant — — Analyst

Thanks. And that’s heartening to know, but my question was not just from the point of view of the past or the current situation, once this lockdown is opening up or China is opening up big time, what we are seeing in chemical industries, specialty chemical as well as basic chemicals here in India that everybody is facing the big hit from Chinese dumping and possibly China would want to do this across the industries, across the world. So this has more in terms of any further pressure coming from Chinese dumping or Chinese exports then how we would be able to — how we would tackle that.

P. K. Kheruka — Executive Chairman

So it again comes to the same thing that you have to be competitive in the market. And in terms of your cost of production and that’s how you can survive in the competition. In terms of the Chinese dumping, if the dumping goes up, we still have mechanism to deal with it by applying to the government for certain amount of relief and whether under anti-dumping duty, whether under safeguard duty or whatever things are available, as a trade remedy measures. In terms of the — like say, cost of production and ability to keep dumping also there is some limit, because this is a continuous process industry. The costs are global generally like soda ash and natural gas and other things are global costs. So if it is possible for Chinese keep dumping without denting their margins then I would agree that they will keep dumping and they will like to destroy Indian NOC [Phonetic] or Indian market for that matter.

But that’s not so, their cost of production, I believe, is almost at the same level at which the prices are prevailing today and we do not foresee them to even drop price further. So, while you are right, the opening that might impact the sectors like chemical and all. But what we have seen is that there is no much difference in the solar industry, particularly because worldwide the industry is still a favored industry, unlike any other industries which are not significantly in the forefront of the current growth phase. Solar still remains. So nothing much is changing there.

Unidentified Participant — — Analyst

Okay sir, thanks. And maybe we’ll take up this maybe after March quarter which should possibly give us more clear picture.

P. K. Kheruka — Executive Chairman

Sure, we’d like to wait that up to March.

Unidentified Participant — — Analyst

Yes, thank you, sir. Thanks a lot.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

P. K. Kheruka — Executive Chairman

Thank you. Thank you very much for questions which you have asked, shows a healthy inquiry into the business of the company. We assure you that we are making great efforts to meet with the ongoing situation and with the production output coming from the new furnace, which should give us double the capacity, double the output that we have been seeing now. The picture would look brighter in the days to come. Thank you very much and goodbye.

Operator

[Operator Closing Remarks]