BOROSIL RENEWABLES LTD (BORORENE) Q4 FY23 Earnings Concall Transcript

BOROSIL RENEWABLES LTD (NSE : BORORENE) Q4 FY23 Earnings Concall dated May. 25, 2023.

Corporate Participants:

P. K. Kheruka — Executive Chairman

Sunil Roongta — Chief Financial Officer

Analysts:

Jiten Rushi — Axis Capital Limited — Analyst

Keval Ashar — DSP Investments — Analyst

Ranganath N — Individual Investor — Analyst

Nikhil Abhyankar — ICICI Securities — Analyst

Santosh Kacharia — Individual Investor — Analyst

Rishabh Shah — Dalal and Broacha — Analyst

Sagar Sanghvi — ADD Capital — Analyst

Anuj Upadhyay — Investec — Analyst

Suresh Jain — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Borosil Renewables Q4 FY’23 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.

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

Jiten Rushi — Axis Capital Limited — Analyst

Thank you, Jhanvi Daniel. On behalf of Axis Capital, I am pleased to welcome everyone to the Borosil Renewables Q4 and FY’23 earnings conference call. We have with us the management team of Borosil Renewables represented by Mr. PK 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 a Q&A session. Thank you and over to you, sir.

P. K. Kheruka — Executive Chairman

Good afternoon, and welcome to the Borosil Renewables FY’23 Investor Call. The Board of Borosil Renewables on 24th of May approved the company’s financial results for the financial year ’23. And quarter four for the financial year ’23. Our results and an updated presentation have been sent to the stock exchanges and have also been uploaded on the company’s website. We will discuss the operation of Borosil Renewables on a standalone basis as well as on consolidated basis. I will also provide you some highlights of the operations in our newly formed acquired overseas subsidiaries.

During financial year ’23, the company recorded a net revenue from operations of INR688.107 crores, an increase of 6.8% over financial year ’22. Sales volumes on a quantitative basis grew by 4.3% as a result of commissioning of new plant, i.e., as SG3 from 23rd February 2023. Average selling prices during the year were about INR136.5 per millimeter as compared to INR133.5 per millimeter in financial year ’22, an increase of 2.3%. Export sales during financial year ’22, including to customers in SEZ were INR195.25 crores, comprising 28.4% of the turnover, an increase of 14.2% for financial year ’22, when it had been INR171 crores. While direct were INR181.07 crores, which were up from INR127 crores in financial year ’22.

During the last quarter of financial year ’23, the company recorded a net sales of INR187.54 crores. From a quantitative standpoint, sales volumes were 7.8% higher than those for quarter four financial year ’22. However, the average expected selling price was lower by about 1.4%. The domestic selling prices were depressed for most of the second half of the year as a result of dumping from China, Malaysia, Vietnam. The landed cost of imports became lower due to a combination of two factors. Firstly, the expiry in August 2022 of antidumping duty on solar glass imports from China imposed in August 2017, coupled with a significant drop-in international freight rates. Meanwhile, the price of natural gas, soda ash, packing materials and other commodities had risen considerably. All these factors contributed to a contraction in margins. EBITDA during financial year ’23, including subsidies of INR9.75 crores from the Government of Gujarat was INR176.55 crores, corresponding to an EBITDA margin of 25.7%, which was a steep decline as compared to an EBITDA margin of 41.1% in financial year ’22.

During quarter four of financial year ’23, the EBITDA was at INR38.02 crores and the margin was 20.3% as against 34.9% in the corresponding quarter in financial year ’22, and 26.7% in quarter three financial year ’23. And I think from increased costs, coupled with lower selling prices which prevailed during this period. Moreover, during this quarter SG3 had been lit up and fully manned. As such, odd expenses were being incurred, while there was little corresponding revenue.

Lower EBITDA led to a decline in the profit after tax and the company recorded a profit after tax of INR88.54 crore, a decrease of 47% over financial year ’22. PAT during quarter four financial year ’23 was INR11.69 crores. This is a decline of 75% as compared to quarter four financial year ’22, which had better sales prices. Ironically, solar glass is the only component in the entire solar photovoltaic value chain which has no import duties whatsoever. With expiry of anti-dumping duty on imports of solar glass from China, post 17th August 2022, imports continue to remain completely exempt from payment of any sort of import duty. While imports are subject to a basic levy of customs duty of 15%, our success are going back to 1999, exempts imports of solar components from payment of customs duty. This is an anachronism, not only because solar glass manufacturing is a most capital-intensive component after solar cells, having the lowest asset turnover ratio, but also because an investigation launched by the Ministry of Commerce as recently as 2022 has found the largest solar glass manufacturer [Indecipherable] of unfair trade practices, that is to say dumping, and has recommended imposition of 63% anti-dumping duty on imports from them.

The order is seriously skewed against the solar glass industry, where imports of heavily subsidized Chinese glass are welcomed into India with no imposition of any duties. There is no level-playing field for this industry. We have been representing our case to the government to enforce the exemption from BCD on imports of solar glass.

The solar installations in FY 23 stood at a 12.8 gigawatts in FY’23 against 13.9 gigawatts in FY’22. However, overall domestic demand for solar glass has become stronger as demand for Indian made modules has risen strongly with export markets like USA, together with strong demand in India. The additional demand for glass is being met through higher imports owing to limited availability of domestic manufacturing capacity and hence the market share of Borosil ERenewables in domestic market currently stood at 19% only in the last quarter of last year. The overall demand situation for solar glass continues to look robust in India as the domestic module manufacturing capacities are expected to rise to almost 100 gigawatts in the next two or three years from about 35 gigawatts currently. The actual domestic manufacturing may rise to 35, 40 gigawatts annually, which will increase the demand three times from the present levels over the next two to three years.

Commissioning of a 10 MW captive power plant of solar plus wind energy being set-up to an SPV in which Borosil has 31% shareholding, which was planned in December ’22 was delayed due to delay in approvals from the relevant state authority. I’m happy to share with you that the requisite approvals have now been obtained and the project is commissioned. This is expected to meet about 35% of the company’s power demand. This has enabled us to increase the use of green power in our manufacturing, while also reducing the average cost of power. We are also looking to setup an additional 8 MW of solar plus wind power once there is enough clarity on the regulations.

I’m happy to share that commercial production from our third furnace SG3 began from 23rd February 2023, taking the product production capacity to 1000 tonnes per day, 6 gigawatts from 450 tons per day 2.8 gigawatts. Going forward, we shall now be in a position to more than double the sales, servicing a higher customer demand, while achieving higher operating leverages. The demand for glass has shifted to higher sizes, where we now have achieved capability. About 55% to 60% of the production is already in large sizes. We have recently commissioned facilities to service a higher-volume of 2 mm back large with holes drilled and also grid printed. These are used for as back glass in bifacial solar PV module and has become a major growth area.

The recently acquired German solar glass manufacturing plant had added an operating capacity of 300 tons per day to BRLs manufacturing capacity. The plants have been operating at about 95% capacity. However, a cold repair of this furnace was carried out from 13th March to 5th May. And the furnace has been brought back into production from 8th May. With the higher capacity of 350 tons after incorporating changes, which should help raise production yields and achieve energy savings. A portion of the capex plan for the processing area is still under implementation, which will help achieve capability to supply larger size glasses and also enable more efficient operations. An overall capex of EUR34 million will be incurred on this for which EUR24 million is being borrowed from banks.

Now, I come to the consolidated results for the quarter which is the first full-quarter post-acquisition. These results include the operations of the wholly-owned subsidiaries abroad. The Interfloat Group registered a revenue of INR121.79 crores in this quarter with an EBITDA of INR5.12 crores, registering an EBITDA margin of 4.2%. The subsidiaries have been able to achieve this despite prohibitively high energy and raw material prices and also shutdown of production from 13th March 2023. The consolidated net revenue and EBITDA for the quarter for financial year ’23 stands at INR309.05 crores and INR39.08 crores respectively.

The energy prices have been correcting gradually. However, on the other hand, the sales pressures have been adjusted downwards in order to maintain competitiveness with imports with an emphasis on domestic manufacturing and sourcing from second force in European Union, US and Turkey, we see export demand from our Indian operations rising significantly over the next two-three years. We believe that with manufacturing operations in Europe and in India, we in a strategically advantageous position to meet higher demand in the export markets.

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

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Keval Ashar from DSP Investments. Please go-ahead.

Keval Ashar — DSP Investments — Analyst

Good afternoon, sir and thanks for the opportunity. Sir, first question is that since we have 1,000 TPD of capacity right now and we can cater to 6 gigawatt of solar module capacity. And India in the next two to three years will have 100 plus gigawatts of solar module manufacturing capacity. So does this give us comfort that our current capacity and upcoming 1,100 tons per day of capacity can be sold-off in domestic market itself?

P. K. Kheruka — Executive Chairman

Yes, gives us a lot of comfort provided the government does not make any further changes it its policy for solar modules in India.

Keval Ashar — DSP Investments — Analyst

Okay sir, got it. Sir, the second question is that over the last two years if I see, the realizations of solar glass is almost been stable, like at around INR130, but our margins have significantly corrected. So is it because of elimination of BCD or the duties or what is the reason our margins have corrected, while the realizations have stayed the same?

P. K. Kheruka — Executive Chairman

See, the cost of inputs have gone up significantly, nearly by 60%, 70% in the last calendar year. And on the other side, of course, selling prices did decline because of the absence of any anti-dumping duty with effect from August of 2017 — so I am sorry, 2022. So what we see here is actually an overall price which is spreading over a long period of time. We had certain contracts at older prices and so on which got executed at those prices. So for all these various reasons we see that the prices was a bit higher, but then they did register a decline in the last quarter.

Keval Ashar — DSP Investments — Analyst

Okay, sir. Got it. Sir, what will be the current realizations of solar glass?

P. K. Kheruka — Executive Chairman

Its slightly lower.

Keval Ashar — DSP Investments — Analyst

Okay, sir. If you can give a number.

P. K. Kheruka — Executive Chairman

It wouldn’t be right to put any number as of now, but it’s slightly lower.

Keval Ashar — DSP Investments — Analyst

Okay, okay, got it, got it. Sir, what is the capex that we are planning for FY’24-’25, India plus Europe?

P. K. Kheruka — Executive Chairman

We just completed capex in Europe. We spent about — a significant amount of money there to rebuild our furnace and stock. As I mentioned in my talk, it’s about 350 tons a day now from 300 tons a day, and the furnace is good for another five years at least. So we’ve spent money there, and of course, we spend money here. So at the moment I do not see any special capex going-in during the current year other than routine maintenance capex.

Keval Ashar — DSP Investments — Analyst

Got it sir. Sir, actually for the next year, the 1,100 tons per day of capacity we are planning in calendar year ’25, so how much capex would be required for that?

P. K. Kheruka — Executive Chairman

So we are taking a pause as of now because we have just completed a large expansion from 450 tons we have moved to 1350 tons. So we will be reviewing this in the next quarters and so on and we’ll figure out which — whether to go for 1100 tons or what the project should be and we will come back to you after that.

Keval Ashar — DSP Investments — Analyst

Okay, okay, got it. The third question is that, we had a tough year in Germany due to energy crisis, etc., which has also impacted our margins over there. So has the situation normalized in Germany? And if yes, then how much margins can we expect from Germany plant in a normal situation?

P. K. Kheruka — Executive Chairman

So there are two sources of energy that we use in Germany, one is natural gas and electrical power. So the prices of natural gas have stabilized significantly to what they were before the war started. And to that extent, it gives us some comfort that the prices have stabilized. However, the cost of electrical power is yet very high. So that I believe is based to a large extent on natural gas, and therefore I would imagine that the price should be coming down in the foreseeable future. But till that time, I would say that power prices still remain high. I see that the working this year would definitely be better, more improved as compared to last year, which was quite a disastrous year frankly.

Keval Ashar — DSP Investments — Analyst

Okay, sir. Got it. But in generalized — in the normal situation can we make around 20%, 25% margins what we make in India in Germany?

P. K. Kheruka — Executive Chairman

That would be difficult to make any overseas operations, particularly Europe and Germany. So we believe that 10% to 15% will be normal margin for that business there.

Keval Ashar — DSP Investments — Analyst

Understood, understood. Thanks a lot sir and all the best for the coming years.

P. K. Kheruka — Executive Chairman

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ranganath N, an Individual Investor. Please go-ahead.

Ranganath N — Individual Investor — Analyst

Sir, congrats for your acquisitions and is seems like — I have few questions on the acquisitions part. One is like, how are you planning to, like you know, fund this in acquisition and capex plans going forward? Is there any chance of equity dilution going ahead?

P. K. Kheruka — Executive Chairman

We already funded the acquisition, paid the money and now we are incurring capex. This is EUR34 million. And out of the EUR24 million is being borrowed from banks, which is already tied-up. The remaining money is funded from internal accruals of the company.

Ranganath N — Individual Investor — Analyst

So there is no equity dilution chance going forward?

P. K. Kheruka — Executive Chairman

There is no plan for that particular leg. Whenever we have more capex plan for expansion, that time we will be raising equity.

Ranganath N — Individual Investor — Analyst

Okay. Thank you. Sir, my second question, you said there is an anti-dumping duty request that you put in for government. So how is that in response from their side? s it positive or like do we expect anything in future?

P. K. Kheruka — Executive Chairman

So anti-dumping duty has been discontinued from 17th August ’22, though Commerce Ministry had recommended, but Finance Ministry declined it. So there is no anti-dumping duty. That chapter is over. If we want to the anti-dumping duties to come into play, we will to file the application again, for every country like China, Vietnam and Malaysia. And then the entire process will be run, which may run up to one year also. After which one can expect anti-dumping duty.

Ranganath N — Individual Investor — Analyst

If I — correct me if I’m wrong, like my understanding. I heard like you know we already filed an application for that. If that’s not the case or are we still in the process?

P. K. Kheruka — Executive Chairman

No we had filed application for continuation of anti-dumping duty against China, which was expiring in August ’22. There DCCR analyzed everything. They held the entire process and after that they recommended anti-dumping duty continuation for two years. But Finance Minister declined it. S that matter is over now. If we want tTo invoke anti-dumping duty on any of those countries, you will have to file fresh application now.

Ranganath N — Individual Investor — Analyst

Okay. Thanks sir. And we looking forward for your profit margin increase. Thanks for taking my questions, sir. Thank you.

P. K. Kheruka — Executive Chairman

Thank you.

Operator

Thank you. The next question is from the line of Nikhil Abhyankar from ICICI Securities. Please go-ahead.

Nikhil Abhyankar — ICICI Securities — Analyst

Thank you, sir. Thanks for the opportunity. So sir, my first question is, what is the share of solar glass in the total cost of a module?

P. K. Kheruka — Executive Chairman

So, it actually depends on which kind of module you are talking about. It it is conventional module where we use glass in the front and polymer back sheet at back side, it would be at 8%, 9%. It it is a bifacial, then it might be 15%.

Nikhil Abhyankar — ICICI Securities — Analyst

Okay, is the bifacial. My second question will be, among the PLI winners who will be ramping up their module facility. So what portion of them are getting into this Bifacial module manufacturing?

P. K. Kheruka — Executive Chairman

So basically all the solar phase now being available are bifacially charged. You could eventually make bifacial modules from every cell available now. But it all depends on what kind of applications and what kind of projects you’re doing. So if you talk about the international scenario, like China almost 45%, 50% in bifacial module, but it is yet to be followed in the same way in India and Europe. So basically it will move higher up in the bifacial modules as we go along, because earlier the equipment were not capable of making bifacial module in India and also in Europe, but now they are changing the equipment and gradually the increase — there will be increase in the bifacial module.

Nikhil Abhyankar — ICICI Securities — Analyst

Okay. And sir are we in talks with any of these PLI winners to — or are being talked with us for getting into any kind of a long-term supply contract?

P. K. Kheruka — Executive Chairman

Actually, most of these people are our customers already. And those who are not also we are in touch with them. And the contracts practically have not worked so-far, like long-term contracts, but supply arrangements on a monthly basis are there. And we hope to continue like that because without the price there is no contract basically and price is something which nobody wants to prefix because of the changing situation. Like solar glass prices keep changing, every component price keep changing and the dynamics of profitability keep shifting from here and there in the module industry. So nobody wants to have a fixed-price. But basically all the people who are going to have module capacities will require glass and higher the domestic value-added is there, they will be getting higher realize. So obviously it will be interesting for them to buy locally.

Nikhil Abhyankar — ICICI Securities — Analyst

And so they are not able to set-up their own glass manufacturing facility?

P. K. Kheruka — Executive Chairman

Well, Adani and Reliance are looking to set up their own capacities and also maybe like [Indecipherable] electricals might look at setting up the capacity. Other than these, we have not heard any other player looking at setting a capacity.

Nikhil Abhyankar — ICICI Securities — Analyst

Okay, so just a final question. So what is the difference in realization for exports and domestic?

P. K. Kheruka — Executive Chairman

So export realization is higher [Technical Issues]

Nikhil Abhyankar — ICICI Securities — Analyst

Sir, I did not get you, can you please repeat.

P. K. Kheruka — Executive Chairman

Export sales realization is higher compared to domestic realization by about 10%, 2%.

Nikhil Abhyankar — ICICI Securities — Analyst

10%. Okay, sir. That’s all from my side. Thank you and all the best.

Operator

Thank you. The next question is from the line of Santosh Kacharia, an Individual Investor. Please go-ahead. Santosh, your line has been unmuted. Please proceed with your question.

Santosh Kacharia — Individual Investor — Analyst

This is with regard to [Technical Issues] INR170 crores of inventories is there, in which how much is the finished goods and how much is the raw material?

P. K. Kheruka — Executive Chairman

Sunil, can you respond on this?

Sunil Roongta — Chief Financial Officer

Yes, sir.

P. K. Kheruka — Executive Chairman

Or you want to come back. In the meantime, we can continue with another question.

Santosh Kacharia — Individual Investor — Analyst

Yeah, this is with another [Indecipherable] results, the power and fuel was — last year it was INR30 crores, now it is INR52 crores. Why is this so much high?

P. K. Kheruka — Executive Chairman

So now we are running third furnace as well, which is a large furnace of 550 tons per day. So we need to have more power and fuel consumption. From 450 ton we have reached 1,000 ton production. So obviously it will require power and fuel.

Santosh Kacharia — Individual Investor — Analyst

But it has not reflected in your turnover because the production has gone up far away itself, so the revenue should have been higher. Whether your build on market has bee shown under inventory.

P. K. Kheruka — Executive Chairman

Yeah, so production — commercial production has begun on 23rd of February, so virtually one — one production has happened in March and there is again some builder in the inventory as well which is why the ratio is not appearing the same.

Santosh Kacharia — Individual Investor — Analyst

So actually whatever you are producing, those goods are not getting sold or your involved but the goods have not been [Indecipherable]

P. K. Kheruka — Executive Chairman

So there are two things. One is that indirect impact is there — large impact is there of goods having been invoiced but not delivered to the customers. So that’s the large impact already, plus there was some buildup in the inventory as well, because initially when you start producing you don’t get 100% right material. So one is to see for one month, two month or so before it can sell everything.

Santosh Kacharia — Individual Investor — Analyst

So just clarify on that [Indecipherable] of inventory, how much is needed and how much is the raw material?

P. K. Kheruka — Executive Chairman

[Technical Issues] Yeah, Roongta jI

Sunil Roongta — Chief Financial Officer

Out of INR174 crore inventory, INR74 crore inventory is raw material and balance inventory of finished goods, working progress, packing material and collect.

Santosh Kacharia — Individual Investor — Analyst

Have you invoice our this INR100 crore, have you invoiced anything?

Sunil Roongta — Chief Financial Officer

That is INR36 crores.

Santosh Kacharia — Individual Investor — Analyst

INR36 crores you have sold but it has not occurred in sales, right?

Sunil Roongta — Chief Financial Officer

That is in [Indecipherable]

Santosh Kacharia — Individual Investor — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Rishabh Shah from Dalal and Broacha. Please go-ahead.

Rishabh Shah — Dalal and Broacha — Analyst

Thank you so much for giving me the opportunity to ask the questions to the management. I have few questions regarding the company — understanding the company. So will the management can tell me or have a brief idea about what will be the realization number for 1 mm glass that is imported from China in India?

P. K. Kheruka — Executive Chairman

Yeah, we obviously we have an idea about what prices the goods come in India. And in fact the goods are sold by us, taking benchmark of import prices. So obviously, we need to know that. But each and every buyer has different pricing. On an average basis the goods, if you were to ask me on a per millimeter basis, it will be about INR110 to INR115 per millimeter.

Rishabh Shah — Dalal and Broacha — Analyst

Okay, thank you. My next question would be regarding for the third furnace. So the third furnace would be a dual furnace. If you know, the dual furnace where in the previous conference calls or in previous investor presentation it was mentioned that it’s on furnace oil and on the diesel, so will that be a dual furnace?

P. K. Kheruka — Executive Chairman

Yes. It will be a multi-fuel furnace. It can be done on different sources of energy. It could be natural gas, could be furnace oil, diesel LDO, propane LPG.

Rishabh Shah — Dalal and Broacha — Analyst

Okay, so yeah. Now my next question would be regarding the number of days for the production of the glass, which is your capacity is 1,350 ton per day. So on yearly basis if I want to calculate on a yearly basis, so for how many days shall I take for the calculation for yearly basis of the production?

P. K. Kheruka — Executive Chairman

You take the full-year, but generally 10% would be downtime for the change and other things. So generally 330 days is what one can take.

Rishabh Shah — Dalal and Broacha — Analyst

330 days which heard.

P. K. Kheruka — Executive Chairman

330 days.

Rishabh Shah — Dalal and Broacha — Analyst

Okay. And also, can you please give me any update for the ADD by the government, which we — that is ADD that is going to be important on China by the government. Is there any update on that?

P. K. Kheruka — Executive Chairman

I wish I would love to give you that update. This is completely beyond our scope. We have been trying very hard and we are hopeful that we should succeed because we have very good reason for our request for grand of basic custom duty at least if not anti-dumping duty. And. it’s a question of when the government will sit up and take notice.

Rishabh Shah — Dalal and Broacha — Analyst

Okay, okay, sir. Thank you. Also I just have one question regarding the 67 gigawatt solar production which was reported as of FY’23. So we do we contribute 100% of it? Do the solar glass contribute 100% of it?

P. K. Kheruka — Executive Chairman

No-no, not at all. This installation can be by of domestically manufactured modules or by imported. module. So a large portion of the installation in the past have been with imported modules. So it will be incorrect to say that it is the made in India or like that and we contribute for the module making. The domestic module manufacturing of course is going up now. So as we speak, the domestic modules maybe about 75% of the installation currently happening.

Rishabh Shah — Dalal and Broacha — Analyst

Okay, okay. Thank you sir. And Sir also I would like to ask that, can you please tell me how much would be the export volume, if you can give me some guidance towards that?

P. K. Kheruka — Executive Chairman

Exports are about 25% of the volume.

Rishabh Shah — Dalal and Broacha — Analyst

25% of the volume. Okay sir. Thank you, and thank you very much for answering the questions and I hope the company prospers in future. Thank you very much.

P. K. Kheruka — Executive Chairman

Thank you for your wishes.

Operator

Thank you. The next question is from the line of Sagar Sanghvi from ADD Capital, please go-ahead.

Sagar Sanghvi — ADD Capital — Analyst

Yeah, thanks for the opportunity, sir. I have two set of questions. One on the volume front. Sir, at 3050 tons per day, what would be the full utilization that you been looking at in terms of percentage? And at full utilization, what kind of volume should we be looking at in terms of square meters or any volume metric that you can help us understand so that we can more than the P&L for that. That is one.

And two on the raw-material front, how should we look at all raw material prices going ahead in terms of soda ash prices? Are we — do we have the contracts for the full-year or half yearly contracts? And even on the other raw materials and power fuels.

P. K. Kheruka — Executive Chairman

So on the production side or the turnover side, one benchmark to take would be that if you were to run both the plants full capacity, like India and Germany, the turnover which one can expect could be about INR1,800 crores to INR1,900 crores per annum.

Sagar Sanghvi — ADD Capital — Analyst

Sir, I understand. But that will take a particular realization per square meter or something into consideration?

P. K. Kheruka — Executive Chairman

Yes, so that is the reason I have given you a band of INR1,800 crores to INR1900 crores depending on what the price would be and what the volume we can expect. In terms of the quantity if you were to ask me from Indian operations, one can expect about 5 crore square meters on 2 millimeters. The German operations. About 1.1 crore square meters on 2 millimeter.

Sagar Sanghvi — ADD Capital — Analyst

Okay.

P. K. Kheruka — Executive Chairman

With regard to your other question on the cost and prices, we do have supply contracts for soda ash for this calendar year. And this time the contract is linked to benchmark of quarterly pricing. So should there be any changes in the quarterly pricing, it will be applicable to us from the next quarters. Suppose the price in this quarter…

Sagar Sanghvi — ADD Capital — Analyst

With the lag effect.

P. K. Kheruka — Executive Chairman

With the lag effect, yes.

Sagar Sanghvi — ADD Capital — Analyst

Got it. About other fuels.

P. K. Kheruka — Executive Chairman

For power and fuel, like power, of course, is like Discom and now we, of course, have our own power. And fuel, we are buying from the government owned companies, and natural gas coming from Gail.

Sagar Sanghvi — ADD Capital — Analyst

So what so what would be the margin should we be looking at? Is it 22% margins or will it be a normalized 15%, 16% kind of margins for a consolidated number?

P. K. Kheruka — Executive Chairman

So, our margins in last three years have not been below 20%, so it is not right to assume 15% margin. But we expect margins to be between 20% to 25% generally.

Sagar Sanghvi — ADD Capital — Analyst

On a consolidated basis, not India operations, right?

P. K. Kheruka — Executive Chairman

Standalone I’m saying.

Sagar Sanghvi — ADD Capital — Analyst

My question was on the consol basis.

P. K. Kheruka — Executive Chairman

On the international operations we see margins to be between 10% to 15%, so one can do the consol.

Sagar Sanghvi — ADD Capital — Analyst

Got it sir, Okay fine. Thank you. Thanks a lot, sir.

Operator

Thank you. The next question is from the line of Anuj Upadhyay, an Individual Investor. Please go-ahead.

Anuj Upadhyay — Investec — Analyst

Yeah, hi, thanks for the opportunity. I’m from Investec, not an individual investor. Anyway sir, you mentioned about the market shares — domestic market share declining to 19%. Can we show some kind of a number on the export market and then watch [Indecipherable] China has a major role to play out there. But any market share which we can figure out for us.

P. K. Kheruka — Executive Chairman

So there are different markets in which we have different market shares, it is not uniform like Indian market. Of course, we can discuss about the market share and we may not have complete idea of other markets as well. So [Speech Overlap] to our German operations, we know that we have a large market share there. Our German company is holding almost 60% to 65% of the market in Europe. We have another 10%, 12% there. So that is the market-share we enjoy there. In Turkey, we may be about, again 10%, 15%. And in USA we are hardly there, may be 1% or 2%.

Anuj Upadhyay — Investec — Analyst

Okay, export which you are doing is largely concentrated to the European [Speech Overlap]

P. K. Kheruka — Executive Chairman

Europe and Turkey.

Anuj Upadhyay — Investec — Analyst

Europe and Turkey.. And going ahead considering the fact the domestic competition is one your intent. What would be our strategy in the export domestic composition, because largely we are in the export market.

P. K. Kheruka — Executive Chairman

Yeah, we maintain our focus on the export market subject to the limitation of growth there sometimes. But, of course, we have to increase our presence in the domestic market as we grow the volumes because the demand and the manufacturing activity in India is growing very fast as compared to other other countries — other markets. But maybe after one or two years, USA will become another growth area. But as of now we concentrate on Turkey, Europe and India.

Anuj Upadhyay — Investec — Analyst

Okay. And sorry sir I joined a bit late so I missed out on the Q4 production and sales volume. And also the bifurcation among the domestic electrode sales, can please help me out on this?

P. K. Kheruka — Executive Chairman

So the sales volume has gone up by about 7%, 8% in the quarter, led by the commissioning of SG3e, but it has not got the full operations as of now. We started only from 23rd February. So from the current quarter the impact will come in a major way and then it will show right picture.

Anuj Upadhyay — Investec — Analyst

Right sir. And the export and domestic mix?

P. K. Kheruka — Executive Chairman

Well, it was about 25%, 26% percent in export in the last quarter.

Anuj Upadhyay — Investec — Analyst

In the last quarter. Sir, on you agreement on the soda gas was expired in December ’22 and we have not entered into a new contract. This is in what time period and how much is the annulated prices compared to the previous quarter?

P. K. Kheruka — Executive Chairman

So we are still waiting for right level of the prices for new contract, but in the meantime we are using a major part of our operations furnace oil, which is cheaper than the market related as of gas as of now. And the market-related gas sizes also have come down, but they are still way above furnace oil prices. When they are almost at same level, we will like to enter into countries.

Anuj Upadhyay — Investec — Analyst

Fine sir. So likewise in Europe, even in India we are using furnace oil, right?

P. K. Kheruka — Executive Chairman

Sorry, you say again.

Anuj Upadhyay — Investec — Analyst

Likewise in our European operation, even in domestic market we are using furnace oil. This is what you are saying?

P. K. Kheruka — Executive Chairman

In Europe we are using completely natural gas and oxygen and like that. There is no use of furnace oil in European operations. In India, almost about 18% to 20% is the utilization of gas and rest is furnace oil. So that’s the mix right now in India. But as and when the prices of gases are raised, we will again shift back to gas.

Anuj Upadhyay — Investec — Analyst

And with the commissioning of this 10 MW captive power plant, any rough figure you can mention how much are we saving in the power cost? Or how much we could save say with the [Indecipherable]

P. K. Kheruka — Executive Chairman

We hope to sell about now 35 lakhs to 40 lakhs per month.

Anuj Upadhyay — Investec — Analyst

Okay sir. And lastly, sir, in your opening remarks you mentioned about we are rethinking on the strategy of coming of the SG4 and SG5. We have a discussion on this expansion [Indecipherable] majority of them are going for the expansion plan on the module manufacturing. So the reason for where you get the strategy has to do with the intense competition because the demand I don’t think is concern as of now, it has to do with the prices. Am I right in my assessment? sir?

P. K. Kheruka — Executive Chairman

So we are currently in the process of stabilizing our expansion because after having expanded from 450 to 13 50 tons, we need to take a pause and we cannot be in a hurry. And similarly there are other aspects like — on the duty front there is no clarity as of now and we cannot only chase the revenue and not the bottom-line. So we would not like to sacrifice too much on the bottom-line and just chase the growth. So we will take the call at opportune time when to put in money for the next expansion.

Anuj Upadhyay — Investec — Analyst

Fair point sir. And lastly, sir, if at all we, say suppose if we decide to go ahead with the this expansion next quarter, how much time will it take for — this earlier target was to set-up this capacity by FY26. We’ll be sticking to the same time line or that will be [Indecipherable]

P. K. Kheruka — Executive Chairman

Yeah, it takes about 15 to 18 months anyway and whenever we take the call from there, it can be another 18 months you can say.

Anuj Upadhyay — Investec — Analyst

Thank you sir. Thanks for answering my question and best of luck.

Operator

Thank you. The next question is from the line of Rishabh Shah from Dalal and Broacha. Please go-ahead.

Rishabh Shah — Dalal and Broacha — Analyst

Hello, thank you very much for taking my questions again. One of the questions which I have is for the backward integration that the company had given the guidance for soda ash and natural gas, are there any updates on the backward integration for that?

P. K. Kheruka — Executive Chairman

No we do not have any such plans. We have never given guidance to get into backward integration of these products. So I think you, you’ve seem to have misplaced.

Sunil Roongta — Chief Financial Officer

Okay. And also I just have one question regarding, are there any differentiation in the quality of glass that is produced by us and the glass which are imported from China, Vietnam and Malaysia?

P. K. Kheruka — Executive Chairman

Generally, the quality is same. However, our quality there are some differences in composition which gives our glass real longevity. Which we do because we believe in making a better product.

Rishabh Shah — Dalal and Broacha — Analyst

Okay, okay sir. Thank you very much and thank you for having me on the conference call. Thank you.

Operator

Tank you. [Operator Instructions] The next question is from the line of Suresh Jain, an Individual Investor. Please go-ahead.

Suresh Jain — Individual Investor — Analyst

Hi, good afternoon. My question is pertaining to the capital allocation policy. Now, in the absence of a big CapEx in the ongoing year, what will be the capital allocation policy regarding the free-cash flows?

P. K. Kheruka — Executive Chairman

So we are continuously innovating and continuously looking at various opportunities in the business. We have recently started R&D center also in Pune, with an objective to develop products or come up with cost-saving measures in all. Whatever cost saving measures are there, they may not require large CapEx. But in case we are able to come up with some new products, new ideas, we will discuss that and then we can we can come back with the plans to do any CapEx on that. So in the meantime, the small CapEx or routine CapEx we will continue to do.

Suresh Jain — Individual Investor — Analyst

No sir, my question was whether the free cash flow that we will generate this year, whether we will save for the CapEx that is upcoming in next year or whether we will use it to reduce the debt or a possible dividend payout? What other managements thinking on this?

P. K. Kheruka — Executive Chairman

So. I think we will take the call at appropriate time Right now we are not in a hurry to decide on that. And our next expansion may not be very late as well. So maybe the most priority the cash-flow will be used for next CapEx cycle. But we’ll have to take a call as and when we reach that level. Okay understood. I’ve just one more follow-up question. So always our exports were very-high margin product for us. Now that we have a European subsidiary, where is the material that we are producing in Europe is being sold versus where were we exporting from the Indian manufacturing houses? So material produced in Germany is getting sold almost 100% into European market only. Whereas we have been exporting to Europe, Turkey USA, MENA countries and all the all the areas where the demand is there. So that’s how it is being looked at. Currently also we continue to export material from India to European market because there is a higher demand for glass, which the German plant cannot completely meet.

Suresh Jain — Individual Investor — Analyst

Okay, understood. So none of our exports are being sacrificed because of this European plant, right?

P. K. Kheruka — Executive Chairman

No, because they contribute only 60% of the market and there is a room available for other players to supply it. So we continue to…

Suresh Jain — Individual Investor — Analyst

Understood. That’s all from my side. Thank you.

Operator

The next question is from the line of Jiten Rushi rom Axis Capital. Please go-ahead. Jiten, request you to please unmute your line and proceed with your question.

Jiten Rushi — Axis Capital Limited — Analyst

Thank you for taking my question. My first question would be on the Europe business. As you said the plant has — the CapEx is done and plant has settled down. So what could be the contribution from the European plant in terms of total revenue this year probably or what is the — or you said utilization level can be at 18% plus at all and there is hopefully room for huge scope in the European markets. So what can we see, any guidance this year for the European results from the German plant?

P. K. Kheruka — Executive Chairman

So we can probably expect a total of about INR550 crore to INR600 crore from that plant.

Jiten Rushi — Axis Capital Limited — Analyst

And sir, this margin would be like 15%, 20%.

P. K. Kheruka — Executive Chairman

10% to 15% EBITDA margin.

Jiten Rushi — Axis Capital Limited — Analyst

And sir, this INR500 crore, INR550 crore is make like the peak or we can achieve more?

P. K. Kheruka — Executive Chairman

Well, we have just rebuilt the furnace and we will have to build up extra production get inefficiencies and all. It could be slightly better, but this is what we normally expect when we started the production. As we go along, we will try to improve our productivity over there.

Jiten Rushi — Axis Capital Limited — Analyst

What will be the portion of exports to the location with anti-dumping duty and probably how competitive are we in those areas that probably I know that your main export in Europe and Turkey. How are we competing with China in those region. Is there an anti-dumping duty there?

P. K. Kheruka — Executive Chairman

So in both these markets there is anti-dumping duty against China. But there is no anti-dumping duty against Malaysia and Vietnam who happen to be the large exporter to these two geographies as well. And we have to compete with them.

Jiten Rushi — Axis Capital Limited — Analyst

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

Operator

We have a follow-up question from the line of Suresh Jain, an Individual Investor. Please go-ahead.

Suresh Jain — Individual Investor — Analyst

Sir, one question. Sir, in the earlier calls we had suggested that 1,000 TPD would help generate INR1,200 crores-odd of revenue, which indicates to 1.2 times asset turn. But in the previous question you suggested that a 350 tons plant could generate INR500 crores of revenue which is much higher asset terms. So is it the case that the European plant are much better in terms of efficiency and productivity?

P. K. Kheruka — Executive Chairman

No, in fact the prices in Europe are higher compared to what they are in India, and it can generate a better product mix as well because there are lot of markets which they sell, like greenhouse or bifacial markets which are paying higher amounts there. In Indian context we have to compete with Chinese and our prices remain lower, so that also is another bottleneck in India.

Suresh Jain — Individual Investor — Analyst

Okay. So, sir regarding Indian manufacturing plant, 1.2 times asset turn is still an ideal situation.

P. K. Kheruka — Executive Chairman

1.2 asset turn is happening because ours is a brownfield expansion here and we have setup the old plants, like say 2010 and 2019 and all. But if it was a new plant to we set up in India, the asset turn will not be like that. It will be mostly 0.85 like that. So in Indian context for our company you can say it will be 1.2 times. But if we have to really look at any greenfield plant it will be much less than 1.

Suresh Jain — Individual Investor — Analyst

Okay, that’s very helpful. Thank you so much.

Operator

Thank you. As there are no further questions, would now like to hand the conference over to management for closing comments.

P. K. Kheruka — Executive Chairman

Thank you very much for your questions. These have been — they reveal the interest that investors are taking in the stock and the operations of the company. I can only assure investors that we continue to remain alive to the situation and we are constantly working towards making products that would have a higher realization. We are also working constantly to maximize production and also to keep our costs at the lowest possible level. I do want to inform people that’s what we have done now is have installed a very modern, very sophisticated plant and it just takes time to tune it up and to get the maximum output from this. So we are hard at work, and we are seeing results every week, things keep getting better. So we are quite confident that in time we should be able to cover all the points that need to be covered and vision to have very efficient production from the total operation. Thank you.

Operator

[Operator Closing Remarks]