Waaree Energies Ltd (NSE: WAAREEENER) Q3 2025 Earnings Call dated Jan. 31, 2025
Corporate Participants:
Amit Paithankar — Whole-Time Director and Chief Executive Officer
Sonal Shrivastava — Chief Financial Officer
Analysts:
Pooja Swami — Analyst
Deepak Krishnan — Analyst
Prateek Kumar — Analyst
Nikhil Nigania — Analyst
Mohit Kumar — Analyst
Kuntal Shah — Analyst
Prateek Jain — Analyst
Naman Kasad — Analyst
Akash Mehta — Analyst
Kartik Kohli — Analyst
Ketan Jain — Analyst
Sarang Joglekar — Analyst
Shyam Maheshwari — Analyst
Aashish Upganlawar — Analyst
Nikhil Abhyankar — Analyst
Balakrishna — Analyst
Rohan — Analyst
Garvit Goyal — Analyst
Piyush Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 9 months FY25 earnings conference call of Vadi Energies Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Pooja Swami from Orient Capital. Thank you. And over to you ma’am.
Pooja Swami — Analyst
Thank you, Elvis. Good afternoon everyone and welcome to the Q3 and 9 months FY25 earnings call of Wari Energies Limited. From the management today we have with us Mr. Amit Paithankar, full time Director and CEO Ms. Sonal Shivasava, Chief Financial Officer. Mr. Abhishek Parikh, Group Head Finance and Mr. Rohit Vade, General Manager Investor Relations.
Before we proceed with this call, I would like to give a small disclaimer that this conference call may contain certain forward looking statements which are based on beliefs, opinions and expectations of the company as of date. A detailed disclaimer has also been given on the company’s investor presentation which has been uploaded on the stock exchange. I hope everyone had a chance to go through those results.
Now I would like to hand over the call to Mr. Amit Paithankar for his opening remarks. Over to you sir.
Amit Paithankar — Whole-Time Director and Chief Executive Officer
Thank you very much Pooja. Good afternoon everybody and a very warm welcome to Wadi Energies Limited Q3 and 9 month FY25 earnings call. We really appreciate your continued interest in our company. Like the last conference call, if you have our Q3 presentation handy for your reference it will be helpful to follow along with today’s update. Let’s start with the first page of the presentation. On the left you can see our United States factory where we have recently started commodity commercial operations. The truck that you see leaving the factory marks the beginning of our journey in the US market by producing in the US and then selling to the US at the center we have a picture of our Chikli factory located close to Mumbai in Gujarat. This facility is a key part of our manufacturing base as also expansion.
On the right hand side we have an image of our brand new cell factory where we have already started pilot production. We are currently commissioning the factory line by line with significant ramp up expected in the coming months. In my commentary I will touch upon six broad themes and they are first our Q3 results. Then macro and microeconomic environment in which our business operates and thrives. Third, our strong and growing order book. Fourth, to supplement the order book the expansion plans that we have. Fifth, Vadi’s evolution from being a leading solar company to a leader in broader energy sector and finally the DNA of VARI Energies which is going to continue to deliver the kind of results we are going to talk about today.
So let’s start talking about our results. Our team at VADI has just done an absolutely phenomenal job. We have recorded a revenue of 3400545 crores with a growth of 115% year on year. EBITDA stood at 810 crores with a substantial growth of 257% year on year. Our patch stood at 507 crores which grew at 260% year on year. This result that everybody in Vadi is proud of and I would like to personally thank each and every one in the VARI family for the dedication and resolve we aspire to deliver these results quarter after quarter and year after year.
Let’s move on to the macro and microeconomic environment that we are living in. The growth that we see is catalyzed by a favorable macro condition in the global as well as Indian solar markets. Worldwide solar capacity is expected to reach to nearly triple and in 2030it is expected to be 5.8 terawatts from 2.1 that we are at today. India is on the track to become a dominant force in solar energy with a larger growth rate where in 2024 we are at 98 gigawatts overall solar capacity and in 2030 we are going to be at 280 gigawatts. The cost of solar power and batteries have been consistently going down. A combination of the two can supply reliable 24. 7 power at the cheapest cost. And that’s the reason why this, ladies and gentlemen is a multi decadal growth story. And we are just at the beginning of this.
We see this going beyond 2000-30s into 40s and well into the 50s. Governments worldwide have clearly seen this trend and hence are supporting this transition through favorable policies. In India, MNRE has provided clear direction by applying approved list of models and manufacturers, in short ALM to solar modules which will be extended to solar cells by June 2026. Anti dumping duty applied to various parts of the value chain will also help in Atman Nirbhar Bharat in the United States, the Inflation Reduction act has been talked about a lot in the recent past. The main questions that are being asked are will the IRA stay in what shape or form will it stay? How will it affect worry? All of these are valid questions and the answer to these questions is that when we establish a business, we ensure that it fundamentally is self sustaining.
Our objective is to create operations that can thrive independently without being dependent on external factors. Our US Operations are structured to be profitable on their own merit. That being said, if IRA or similar program continue in some form, it would undoubtedly provide significant additional benefit to the business. It is also important to consider that in our sales profile, exports in the last nine months, the first nine months of the fiscal, are in the range of 20% and we will discuss about this in detail when we talk about the order book. Our US Factory is in fact the crown jewel to manufacture solar panels for United States in the United States. We have all heard the clarion call made by Honorable President Trump the United States in Davos encouraging everybody to manufacture in United States. And that’s exactly what we are doing.
Let’s move to our order book. Given the favorable macroeconomic environment, it is essential that we capitalize on opportunities it presents and our sales team has done a phenomenal job in ensuring that we have a very strong order book. As of yesterday our order book stands at 26.5 GW and in rupee terms this is around 50,000 crores. This also includes order from our subsidiary WRTL which is separately listed entity under Warri Energies Limited. This order book is well diversified between India and international markets. This is 54% overseas and 46% from India. Our revenue mix for the last quarter was 79% from India and 21% from international markets which reflects differences in the project timeline between regions.
In India, the velocity of order is high. For retail customers it is in the range of one to two months and for high large utility customers it is nine to 12 months. For international orders, particularly in the US we have longer timelines in the range of one to two years. And that’s the reason why our sales mix does not reflect the kind of order mix we have. In fact, we can use the order book as a lever to maximize the utilization of our factories and maximizing profitability. While on the order book we would like to talk about the conversations that we are having with our US customers. Our order books stand strong and external changes have not really impacted it.
In fact, our order pipeline is growing every month and we see buoyancy in the US market, we see buoyancy in the India market and we see buoyancy all across the world. That brings me to the next topic which is expansion and new factories build out. As we have a robust order book, of course we need to have adequate capacity built for execution. All of our projects are on track. We mentioned in our last earnings call that our US factory would be ready and operational in January and in accordance to that commitment, we have started commercial operations on January 22nd, 2025. Our cell factory is on the path to full scale production with pilot production already underway.
The 1.4 gigawatt monoperc lines are in advanced stages of trial production and we should commence full fledged commercial operations very soon. The remaining 4 gigawatt Topcon lines will also be operational by April May timeframe. Additionally, our 6 gigawatt PLI project for INGUS cells and wafers remains on target. These expansions are critical to meeting our growing demand from customers and as evidenced by our order book. This brings me to the next theme. This is an extremely important theme because it’s about the future evolution of VARI from a solar manufacturer to a broader renewable energy player. There are lots of adjacencies to the solar business which we are tapping into.
Our board has already approved green hydrogen and electrolyzer business with an investment of 551 crores. Battery business with an investment of 2073 crores. And the renewable power infrastructure business with an investment of 650 crores. We are also making an investment of 130 crores in our inverter business. We are in the process of acquiring ENEL Green Power India. The acquisition is of course subject to statutory approvals. We have been awarded a PLI for 300 megawatts electrolyzer manufacturing facility and just a few days ago we have won a Secchi bid for 90,000 tons of green hydrogen production. So ladies and gentlemen, as you can see, WARI is evolving with an aim to accelerate energy transition in India around the world. All of this brings me to the last point which I want to mull on.
Throughout its existence, all the way from 1990 till now, Vadi has delivered what it has promised. And the reason why it has delivered what it has promised is because of its concentration and a single minded dedication on operational efficiency. Making sure that we are extremely lean with a single minded focus on costs, on efficiencies, on being lean and delivering results quarter after quarter, month after month and year after year. And all this happens by diligence, by persistence and by teamwork. Every member of our WARI family is driven towards excellence and I would like to thank each and every one for a phenomenal quarter.
With that I will now hand over to Sonal for further updates.
Sonal Shrivastava — Chief Financial Officer
Thank you Amit and good afternoon to all and welcome to the earnings call. As rightly mentioned by Amit in his comments, Team Vahri has done a remarkable job and that is of course reflected in Our numbers for Q3 and 9 months FY25. Looking at our numbers on a consolidated basis we have reported revenues of rupees 3545 crores in the quarter making a substantial increase of 115% on a year on year basis. EBITDA for Q3FY25 stood at 809 crores. A significant growth of 257% year on year basis and a margin of 22.84%. Profit after tax for the quarter stood at 507 crores against 140 crores last year reporting again a growth of 260% on a nine month basis. We have reported revenues of over 10,000 crores. So 10,705 crore in this year which is an increase of 24% on a year on year basis. EBITDA for nine months FY25 was rupees 2006. 63 which is an increase of 56% over the previous year and a margin of 19.28%. Profit after tax stood at 1,283.66 crores against 799 crores in the previous year which is a growth of 60.62%.
With this we can now start the question and answer session. Thank you very much.
Questions and Answers:
Operator
Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deepak Krishnan from Kotak Institutional Equities. Please go ahead.
Deepak Krishnan
Hi sir, hope I’m audible.
Amit Paithankar
Yes Deepak, you very much are.
Deepak Krishnan
Sure. So just obviously on top of your mind, you know, if you look at Q on Q, you know production has been at a similar level, so has been revenue. But gross margin has sort of seen about a 500 basis points expansion. So I think any factors or anything that we want to highlight, given a similar level of execution, what has sort of changed for us? Nor do we see any sort of cost materially being different. So you know, is this a procurement strategy that we sort of applied? Is it for us, does it hold for the industry as a whole and you know, X of cell, if we can we do sort of a similar sort of margins for the current business on an annualized basis. That’s my first question.
Amit Paithankar
So Deepak, let me paraphrase the question because for some reason you were not very clear. So please let me know if I have understood your question very well. What you have said is that the revenues between the last quarter and this quarter are sort of similar. And so what is the reason for margin expansion and try to give some reasons for margin expansion. Is that the question that you have asked?
Deepak Krishnan
Yeah. So broadly understanding similar production, similar revenue levels and no real change in cost pricing at a global level. So you know what measures have caused this sharp improvement in margins? How sustainable is it? And an analyzed basis, if we do the same business, do we sort of continue to report these sort of margins?
Amit Paithankar
So, Deepak, thank you very much for the question and a great question. I would love to put forth a few key aspects of the business and I will then hand it over to Sonal for numbers. Firstly, like I said, we have a fairly large order book and that gives us a good lever to choose orders depending on the customer requirements as also what are factories can produce and therefore maximize profits. So that’s a lever which we use fairly well to our advantage and mix the orders fairly well to ensure that we have a consistent profitability. The input costs for most of our materials have actually come down quite substantially in this last quarter and that has also given a fillip overall to the profitability. We are constantly looking at keeping ourselves lean. We are constantly making sure that our losses are at the minimum and that is also an extremely high contributor to the overall profitability. So just running a lean execution machine is an extremely important part of the whole equation. Sonal, you would like to comment on that?
Sonal Shrivastava
Yes. No, thank you for your question. Just a couple of points I will add here for the margin, especially on quarter, on quarter basis. In this quarter, what we’ve also benefited is, you know, we are looking at some profitable orders and we continue to, in our basket, look, take orders which are going to be profitable for us. That’s point number one. Point number two. Also in the domestic side, we are increasing our focus. On the retail side, that basket is also growing. And the last, as part of our cost optimization, we continuously look at the new supply chains from various sources. The idea is to diversify here and seek out wherever the cost is better. And last point which I would like to add is also on the productivity side, we are working on efficiencies on our lines and our cost of production. So these are the focus areas. I think we’ve said it before as well. This continues to be our focus area and we’ll of course be managing this very actively even in the coming months and quarters.
Deepak Krishnan
Sure. Thanks for the reply. Just wanted to also check both the order book as well as the revenue. I think revenue already included indicated in your opening comments. But the real strategic shift in order book towards domestic, is it more like a strategic intent or is it what was available in the market at this particular point of time?
Amit Paithankar
So, Deepak, it’s an excellent question and I would love to deconstruct our internal business dynamics. Our order book, of course, is as we talked, about 55% roughly overseas and 45% India. But our sales profile is different. Right. Our sales profile is about 21% overseas and 71% or 79% India. And the reason for that? The reason for that is differing velocities of order of the constituents of the order book. So for India, you know, retail is really almost book to ship. You know, you book it and you ship it within a month or within two months. Large utility orders, you typically book the order and then ship them in nine months to 12 months. That’s what India Dynamics is. Right. But for the US it’s anywhere between one to two years and some of it is even two and a half years. Right.
So that’s the reason why our sales profile does not necessarily mimic the order profile. And we can use that as a leverage to ensure that our lines are all loaded at the same time. The profitability is maximized. And because we have a US factory, we also can use that lever to decide what orders should be manufactured in the US for the US consumption. So all of these multiple levers actually are into play when we decide how do we plan our manufacturing schedules. And so it’s an artifact really. So from the perspective of markets, let me assure you one thing. Markets are buoyant whether they are in India or they are in the US or elsewhere in the world. Markets are extremely buoyant as far as solar power is concerned.
Deepak Krishnan
Sure. Maybe just a final question, wanted to understand the debt we would get on books because of the email acquisition. And when we look at email’s numbers today, I think profitability is slightly lower. So, you know, what kind of profitability would this have compared to say, similar sort of generators and you know, what percentage is sort of owned by the other partner? I assume it’s nor fund or someone equivalent to that. So maybe any data points regarding that you can share?
Amit Paithankar
Yeah. So broadly, directionally, you know, we’ll be using about 30 percent of our internal approvals to fund some of the newer businesses. But you know, we will potentially be taking decision on the funding portfolio a little later. We have a bit of an NDA restriction, honestly speaking, because of which we may not be in a position to talk about this in the details.
Deepak Krishnan
Sure. And any. Yeah, sorry, go ahead.
Sonal Shrivastava
You know that as you know, the transaction is yet to close, so we have just assigned the first agreement. So obviously we’ll come back with full details once the transaction is closed.
Deepak Krishnan
Sure. And just maybe related to this, you know, thought process of. Yeah, sorry. Yeah. Thank you.
Operator
I would request you to rejoin the queue if you have any further questions so that other participants could be attended to. Thank you. A reminder to participants, please restrict yourself to two questions. If you have any further questions, you may rejoin the queue. The next question is from the line of Pratik Kumar from Jefferies. Please go ahead.
Prateek Kumar
Yeah, good afternoon, sir. That’s for great results. My first question is on US Markets. So talked about in opening remarks. Just elaborate what US Times saying currently in terms of outlook.
Operator
Sorry to interrupt. Pratik, you’re not quite audible. Can you please come to and you know, a clear network area, please.
Prateek Kumar
Hello, Am I audible?
Operator
Much better. Please go ahead.
Prateek Kumar
Yeah, so thanks for the opportunity. My question is on. On US Market. So I just want to understand like what are your US clients saying in current macro environment and political change in terms of the kind of installations which the country may have in terms of going forward as well as like the outlook on incentives which the local players are supposed to get going forward?
Amit Paithankar
Great question, Prateek, thank you very much for that. Our US clients are actually quite unfazed by the changes that have happened in the recent past. In fact, all of them, we have actually spoken to most of them and our order books clearly stands strong. No real changes to that. In fact, we are actually seeing a wider and a bigger pipeline. So any change of dispensation honestly has not resulted in any negative impact on the order book number one, as also the pipeline for the US business that we see. You also asked a question on the outlook on the various US related policies. I think it’ll be too premature to comment on that. We would like. We are ourselves waiting and watching as to what’s happening in the U.S. but the important part, as I said in my opening conversation, is that we have configured the business in such a manner that it needs to stand on its own two feet.
Prateek Kumar
Right. And related questions, there is this 6.5 gigawatt increase in order book in this quarter. Is this all like international markets?
Amit Paithankar
It’s a mix, Pratik. It’s not really only international markets. I mean Indian, Indian markets are also very, very strong. So it’s a mix.
Prateek Kumar
Okay. I have one other question regarding your.
Operator
If you’ve got more questions, please rejoin the queue as we.
Prateek Kumar
Sure. Thank you.
Operator
Thank you. The next question is from the name from the line of Nikhil Nigania from Bernstein. Please go ahead.
Nikhil Nigania
Yeah, thank you for taking my question. My question is earlier. We are hearing of issues in getting equipment from China and you know, even visa related issues for people to come in from China into India to set up the facilities. If you could share if there has been any update or improvement on these trends.
Amit Paithankar
Nikhil, thank you very much for the question. Your first question on equipment from China, we are not seeing any major issues. We are in fact getting fairly regular deliveries of equipment from China whilst visa was a fairly large issue, I would say maybe a quarter ago at this point in time those issues are significantly alleviated. I’m not saying they are completely gone, but we are working very, very closely with the government and government is also supporting us from a visa perspective. So that visa situation is improving every day as we speak.
Nikhil Nigania
Understood. Appreciate the answer. The second question I had is you have a very big order book. Good to see that. But if you could give some color on the order book, is it indexed to some aspect and how binding is it on the customer if prices move a lot from where they are today? And relatedly, if you could just give us some color on the ongoing module prices in India that you’re seeing and ongoing domestic modules with domestic sale prices that you’re seeing in India.
Amit Paithankar
Again great set of questions. So from the perspective of the order book, the way we consider an order as an order when it’s firm and to some extent we have got advances from the given customer and so it’s actually quite firm and strong and therefore we have very high confidence on these numbers. So that that was the question on the order book, your question, the next question was. Sorry, can you repeat that Nikhil,
Nikhil Nigania
Domestic prices that you’re seeing for domestic modules and also domestic modules made with domestic cells. Because we hear cell market is really tight. So if you could just give that.
Amit Paithankar
Again, great question on sales. So you have hit the nail on the head there. In fact, the way I would like to put it is sales is the currency in this business. I think that’s what especially on the domestic content requirement, sales. And that’s the reason why it was extremely important for us to backward integrate into cells going out into the future. As we see more and more cell manufacturers coming in, we can see pricing change a little bit. May not be a whole lot because I think from a demand and supply situation as far as the DCR cells are concerned, I think we will continue to see a gap. So although there will be a bit of tempering of prices, I don’t see it dramatically moving.
Nikhil Nigania
Thank you. Those are my questions.
Operator
Thank you. The next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Mohit Kumar
Yeah, thank you. Thank you sir for the opportunity and congratulations on a very, very good quarter. My first question is what kind of advances you receive for international order? Is it 5% of the value or 10% of the value?
Amit Paithankar
So Mohit, thank you very much for the question and thank you very much for congratulating us. The advances are anywhere in the region of 5 to 10%. It really depends on customer to customer.
Mohit Kumar
Understood. And do you need any certification from the US for supplying your models which will have your sale?
Amit Paithankar
So there are very stringent quality certifications to get into the United States market. And similarly there are standards that we will need to meet, which, you know, our factories are actually configured to take care of all of that.
Mohit Kumar
How much time it will take for you to get a certification for supplying to the US For a sale.
Amit Paithankar
So it already really depends on the customer from a market perspective. Like I told you, we have already abided by all the standards that are required. And so as we start manufacturing, we would have already have the necessary quality certifications required to enter into the US Market.
Mohit Kumar
Understood. Thank you. And all the best. Thank you.
Operator
Thank you. The next question is from the line of Kuntal Shah from Oakland Capital. Please go ahead.
Kuntal Shah
Hi, thanks for this opportunity for the call. So my question is just again related to the margins that you have an order book with a weighted duration of margins. If the entire order book was to be executed today with current raw material prices and technical DCR content for pricing, what would the margins look like? And second question was on. The second question was on, you know, second question was enl though I understand it’s a work in progress. Wanted to understand the rational because the history of past capital good guys going into forward integration into IPPs kind of a business has not that been great from capital allocation standpoint. So you want to originate the transaction, complete the transaction and sell it off, recycle, or are you going to hold on the assets for a much longer period of time? Was the question.
Amit Paithankar
Super great questions. Very, very good questions. The first question is a question which I would like to ask either ChatGPT or maybe Deep Seq because it is beyond my, my intellectual capability to quickly process all the numbers, hypothetically, everything I do it right now. What would be the kind of margins that we have? I’m looking at my CFO here and she kind of agrees to the fact that we may not be in a position to give that number at this point in time. So I would gracefully pass that question. But the second question, you know, the reason why we are actually getting into various different kinds of businesses within the energy transition vertical is primarily to support the core manufacturing business that we have, which is solar. And of course as we move on, the other adjacencies of batteries will come up, inverters will come up, and so on and so forth.
So a business like NL will actually provide us some internal consumption for our modules. And that’s one of the primary sort of reasons why we seek these adjacencies. All of these are adjacencies. Right? So the rationale essentially also, and again, we have a large EPC arm within which is again a listed company, wrtl. And that also is an important element, right, that can forward integrate into the NL type of business. So those are the reasons why we are extremely excited about the NLP acquisition. So overall it’s accretive to our business. It helps the core manufacturing business, it helps the core EPC business. And those are the reasons why we have got into nl.
Kuntal Shah
Yeah, but once the asset is stabilized, will it be transferred or will you retain it for a long period of time?
Amit Paithankar
So honestly speaking, Kuntal, those are decisions which will be made by the business as times evolve. I would not be in a position to definitely tell you whether we will flip it every time, but we may potentially flip some portions of that as well. I mean, that’s definitely there as a part of the overall business plan.
Kuntal Shah
Thank you. I’ll join the queue.
Amit Paithankar
Yeah, I mean, just to, just to add on to it, we have, you know, we could potentially be looking at equity partners as well. You know, we can potentially look at how do we flip it so that, you know, there are various ways in which we will approach this business.
Kuntal Shah
Noted. Thank you.
Operator
Thank you. The next question is from the line of Pratik Jain from Icici Prudential amc. Please go ahead.
Prateek Jain
Yes. Am I audible?
Amit Paithankar
Yes,
Prateek Jain
Hello. Yeah, so sir, just coming back to the margin expense we had. So I understand that you don’t have visibility on the future order book, what kind of margins you will make, but is it an industry wide change that since you were able to. If we see from the P and L, the majority of the drop in expenses came from the raw material as well as the inventory and stock and trade. So is it just for worry, are they doing something different or is it an industry wide change that we can see the margins expanding for other players also?
Amit Paithankar
So again, Pratik, phenomenal question. I will talk about VARI and what we do. Of course, I would not want to give out our secret sauce in entirety. But primarily what really helps us out is number one, our scale. Number two, our dogged determination to be lean and execute in full speed. Have a good negotiating leverage with our, with our suppliers. Like I said, our order book is very strong. So we use that as a lever for the right mix and making sure that the profitability is always sound. So these are all the tricks of the trade that we have available with us.
Prateek Jain
Okay? Sure, sir, Understood. Thanks.
Operator
Thank you. The next question is from the line of Naman Kasad [Phonetic] from Wimbledon Asset Management. Please go ahead.
Naman Kasad
Hello. Hello.
Amit Paithankar
Yeah,
Naman Kasad
Hello. Congratulations on good church of numbers. So my first question is when we are expecting full fledged commercial production, not dial, it’s commercial production of 1.4 gigawatt and 4 gigawatt cell line separately. And also what are the challenges we are facing in setting up a cell line or in general also.
Amit Paithankar
Naman, thank you very much for these questions. As far as 1.4 gigawatt cell line is concerned, it’s a matter of days. I would say anywhere between the next 10 to 15 days or even earlier than that. We will have our COD declared. As far as 4 gigawatts of top one line is concerned. We will, like I said in my opening commentary, anywhere between April and March we should be in a position to start commercial operations.
Naman Kasad
Okay. And sir, another part of the question was what are the challenges a company have in setting up a cell line?
Amit Paithankar
Well, actually there are. It’s a, I can’t generalize it. Every company will have its own nuances and issues. One of the big things in a cell line is if you, if you visit a factory and at some point in time we would love to invite all of you to our factory. You know, inside the clean room, it looks all beautiful, it’s all air conditioned, it’s really clean. The PPM levels have to be maintained. But to keep that that way and also to insert all the gases which is going to be used for doping almost two times that real estate space outside is used for utilities. And these utilities are quite difficult and the gases that are used are actually fairly poisonous at times. And so therefore, you know, those are very critical elements of setting up a cell plant. So safety becomes extremely important while operating as well as while building the plants. So many, many critical issues need to be dealt with on the utilities side.
Naman Kasad
Okay. And sir, my second question is what is the progress regarding the Odisha facility and especially cell part of the Odisha facilities when we are expecting like full fledged starting.
Amit Paithankar
Thank you very much for the question. The Odisha facility, the PLI facility is very much on track. We have talked about 20, 27 of operation and we continue to be optimistic that we will start at that point in time.
Naman Kasad
Okay, thank you. Thanks a lot sir.
Amit Paithankar
Thanks Norman.
Operator
The next question is from the line of Akash Mehta from Canada HSBC Life. Please go ahead.
Akash Mehta
Hi sir. So my first question would be on the gross margins in the US So I mean can you help us understand the gross margins with and without probably the IRA benefits if it were to get implemented? Like how it will impact the gross margins for you and does it impact the existing order book or no?
Amit Paithankar
So a great question. The realization as you know from US market tends to be much better than other markets. And so that determines the gross margins in terms of exactly margins, it really varies from customer to customer. And where do we decide to manufacture? You know we now have in our playbook manufacturing in India, manufacturing in the US. So really giving you a number to that might be difficult. So you want to add something to that.
Sonal Shrivastava
I think you spoke about the order book. So we have our order book which is quite steady in US and we have just started our manufacturing. We are pretty much looking at a very stable sourcing also for us. So we don’t see a major issue as of now in terms of the profitability but we will see how it evolves and we’ll report it in the coming days.
Akash Mehta
Okay. And in terms of these cells that are getting the cell capacity that is getting commissioned. So any part of the existing order book includes cell that will be manufactured from vari,
Sonal Shrivastava
That option is always there. So as you know our domestic cell manufacturing will redefine the two channels. One is of course the DCR market and the second will be the US sourcing as well. And we will see what proportion it takes. But yes, it will take in the domestic cell manufacturing as well.
Akash Mehta
Okay, so as of, as of now nothing is there in the order book, right? It’s, it’s in just a commissioning phase. So no existing order book, doesn’t have.
Amit Paithankar
So it’s like this, right? Our order book is for modules. Our self procurement strategy is independent of that. We don’t commit that we are going to use this cell, that cell in some cases we do. It’s not always but it can be largely independent of that. So the way in which we are going to use the cells, you know our own manufacturer says the priority is twofold. One is for the US market and the other one is for the local DCR market. So the local DCR market is also an extremely important component for India. And so these are the two priorities on which we are going to work on. And on the back of that again our profitability is an important driver on the back of which we will decide where to use our own internal cells.
Akash Mehta
Okay, thank you.
Amit Paithankar
Thanks Akash.
Operator
Thank you. The next question is from the line of Karatek Kohli from clsa. Please go ahead.
Kartik Kohli
Hello sir. Thanks for taking my question. First of all I wanted to understand what is the landed cost of a cell in India and what is the average realization of a module that you sell in India and what you will be able to sell in this on a per unit basis.
Sonal Shrivastava
So basically the sell price really depends on, you know, two things. One is if you’re sourcing for the US market, non China policy or the local market which doesn’t require China policy restrictions and no restrictions around that. So currently the sell price is anywhere between four, I would say four cents. That’s the average which is currently running. That’s for the India market and of course for the US market it is higher as far as the module prices which are concerned. Currently in India the average prices are anywhere between 17 to 17 and a half cents and US of course is higher. There are orders which are at $0.30. There are orders at 27 depending upon the scope that you cover. So that’s the kind of a range we have.
Kartik Kohli
And this you mentioned like the 4 cents is the landed cost. Right. Including all the duties and everything. Okay. And secondly, I wanted to understand how your.
Sonal Shrivastava
Okay plus duties.
Kartik Kohli
Understood.
Sonal Shrivastava
Yeah, go ahead please.
Kartik Kohli
Second question is on how I wanted to understand how your contracts or how your orders which have a long duration. Like sir mentioned that you know there are, there could be big utility companies and overseas orders could be one to two years. So how are they priced? Like essentially if the price fluctuates a lot, like if something was like two years ago, the prices have crashed a lot. So how does like is there a adjustment factor in place for those contracts? Is this something like that?
Amit Paithankar
Yes, absolutely. The contracts are configured in a manner in which there are certain components which are actually ripe to a lot of changes. They are typically taken as pass through or there is a certain formula which is kind of used on a long term basis. You know we, if there is a fixed contract then there are back to back arrangements that are made if at all we get into that.
Kartik Kohli
So like ma’am said, there could be orders at $0.30 also or even $0.24 or so. Like there’s a big variation in that. So like that’s what I wanted to understand. How does that play out?
Amit Paithankar
And that exactly plays out because of the variation, the type of contract, all of that has a bearing on the overall cost. I mean our cost and of course therefore the price that we give to the customer. So therefore you will see that variation. The end game for us obviously is profitability. So worry is razor sharp focused on profitability to ensure that our numbers are met and investors such as yourself get the returns that you desire out of us.
Kartik Kohli
So your contracts ensure Sure. A margin for somebody.
Operator
Could you please rejoin the queue for more questions?
Kartik Kohli
Sure, yeah.
Operator
Thank you. The next question is from the line of Ketan Jain from Avendeer Spark. Please go ahead.
Ketan Jain
Thank you. Good afternoon, sir. Am I audible?
Operator
Yes, please.
Ketan Jain
Yes, sir, I understand that there are four different markets in India. One is the non dcr, one is the DCR and one is an US export market. And there is another one which is a captive market and a CNI market. Sir, if you could help us understand how big are these different market segments and what is our market share in amongst all these different markets? I understand we are majorly in export us, but if you could just brief us about how different markets are the different sizes.
Amit Paithankar
Yes, so you’re absolutely right. India market, you know, broadly, I’ll divide into two parts, retail, which, you know, which comprises of PM Suryagar Yojana, a very, very big component of that. It’s a DCR market. Right. PM Kusum Yojana, which is more in the agricultural sector. That is also pretty much a DCR market. So those two tend to be dcr. Then we move into CNI segment and then through CNI segment, then to a larger segment of of large utilities and so on and so forth. That’s a mixed bag. Some of them could be dcr, some of that may not be dcr. Even some of the SECI tenders could be dcr. Off late, the DCR clauses are kind of not as much pronounced. So again, on the larger size of the orders, it’s a little bit of a mixed bag. And it may or may not be dcr. Like I said, US tends to be a fairly large component of our overall order basket. But that need not necessarily be the case as far as our sales profile is concerned.
Ketan Jain
Understood. Sir, if you could help me with the gigawatt size. Like how big is the DCR market in India annually? Like, you know, every year there’s 20 gigawatt demand.
Amit Paithankar
Yeah. So just to give you an example, right. The retail market is actually growing at a very, very rapid rate. I mean, if you just look at the goal of PM Suryagar Yojana of the number of households multiplied by 3 kilowatt per household, it almost lands up to about 3 gigawatts of requirement. Right. And that should be fulfilled in the next one, one and a half years. So we are talking about a very, very large market India at this point in time. I think we were straddling around 18, 19, 20 gigawatts a year, every year till 2030. We are actually going to see an exponential rise and in the out years I’ll not be surprised if you are in the region of around 40 gigawatts to 50 gigawatts overall and each of the segments growing within that.
Ketan Jain
Understood. For USA like for example we export India exported around 60 gigawatt last year. Like how, what’s the trajectory of this market in the size, in terms of size.
Amit Paithankar
So US market on an overall basis is I would say somewhere around 35 to around 30, 35 gigawatts right now and we’ll climb to about 100 gigawatts, 220 gigawatts by 2030.
Ketan Jain
Okay. Okay, thank you. Thank you.
Amit Paithankar
Thanks Kevin.
Operator
The next question is from the line of Sarang Jogulekar from Vimana Capital. Please go ahead.
Sarang Joglekar
Yeah, so you said input costs dropped, right? So just wanted to know what input cost dropped. Is it the cell?
Operator
You’re not quite audible. Could you please come with this better network?
Sarang Joglekar
Can you hear me?
Operator
Yes, please go ahead.
Sarang Joglekar
Yeah, I was asking, you had mentioned that the margin expansion was partially due to drop in some input cost. So if you could expand on that, what actually, what price is actually fair? Is it the cell or is it the other raw material?
Sonal Shrivastava
So basically for our input, you know we have two main raw materials, so to say one is of course the cell cost and then the other is you know, basket of materials where we call you know, balance of system. So the main components are there is the aluminium, the glass and some adhesives like EPA and eva. So this is a. And others of course there are other things as well. This is bos. And then you have the cell cost. So we have seen a downward trend in the cell cost in some pockets and you know you have to sort of source that tie up the quantities so on, so forth. And it’s been a trend since early beginning of this year.
Now it’s stabilizing and you can get this information on Infolink actually quite widely available and the other materials also partially we have seen some costs come down but then again pick up on the slightly turning around. So it’s all about how do you sort of actively manage your sources and which ones you want to tie into for little long term contracts, which one you want to keep flexible for the short term rolling contracts. And we constantly do that when we’re taking orders or when we are even reviewing it when we’re executing orders. So this exercise really continues like I said.
Sarang Joglekar
Got it, thanks. That’s it,
Operator
Thank you. The next question is from the line of Shyam Maheshwari from Aditya Birla Mutual fund. Please go ahead.
Shyam Maheshwari
Yeah, thank you for the opportunity and congratulations to the entire VARI team on a great set of numbers. Sir. Firstly, on the gross margins, wanted to understand a little bit more in detail if it was just the cost or the sourcing of the sales at a lower cost that played a part or has pricing also moved favorably in the last six months post the implementation of alma? So has the pricing also contributed to this paid number, sir?
Sonal Shrivastava
So overall pricing does. You know, we are doing a little segment management, like I said at the beginning. We’re also looking at to penetrate the retail market growth, that share. So that’s also helping us in terms of our mix in the domestic market. So yes, it does play a role, the pricing. Plus we’re also, like I said, optimizing on some good orders. Like you can chase the profitable orders and give up some orders which are, let’s say, not so profitable. So that also goes on constantly.
Shyam Maheshwari
Interesting. So the 17, 17 and a half cents that you’re mentioning in the utility market, what Was that? Maybe 3 ALM. If you could just give a comparative figure.
Sonal Shrivastava
So that was about 15, 15, roughly you would say, oh,
Shyam Maheshwari
Interesting. Okay. And secondly, wanted to understand from strategy point of view, we’re meeting quite a few ancillary acquisitions and business opportunities, particularly on the inverter side. Wanted to understand what was the thought process for going into this business and what is the existing competitive landscape here like this, largely dominated by Chinese players currently on the inverter side and probably we are among the first Indian guys entering there and the kind of size of market here going ahead.
Amit Paithankar
Wait, a great question, Shyam. So wherever there is a solar panel, there has to be an inverter and that’s one of the key rationale. There are of course a basket of players right now available in the marketplace, but there is a demand and supply gap in the inverter segment. And which worry could fill, number one. Number two, there are some requirements from a data protection perspective that if we have a local manufacturing, it really helps us. And so we also find overall environment, political or other policy environment favorable towards having local manufacturing of inverters as well as a part of overall Atman Nirbhar Bharat and making sure that the data that comes out of inverter actually stays within India. And so that also is a reason why we looked at inverted got a market favorably.
Shyam Maheshwari
Interesting, sir. And currently are there any other Indian players?
Operator
Could you please rejoin the queue for more questions? Thank you. A request to all participants. Please restrict yourselves to one question so that we can address more participants. Thank you. The next question is from the line of Ashish upang Galawar from InvestQ PMS. Please go ahead.
Aashish Upganlawar
Yeah, thank you so much for this. Wanted to understand a bit in detail since our order book is almost half overseas. And so is the US market largely dependent on IRS for viability of the solar capacities that are getting installed there? And if not, then what happens to the overall supplies that we do from here? If that were to be diverted, maybe in India or other countries, does our profitability suffer? So overall from Bari’s perspective or from the sector’s perspective, can you just help us understand all these things? How whether can there can be a possibility with the kind of capacities being put in India? There are also kind of reports that basically there can be a oversupply kind of situation maybe three years in. So with all these concerns, it will help us as investors to understand your perspective on this.
Amit Paithankar
Sure. Ashish, very, very interesting question and very important question. As we look out into the future and look at various incentives like IRA being there or not being there, how will it impact the business on a long term basis? If we look at, you know, there are two possible cases, right? IRA continues in some way, shape or form and therefore, you know, it potentially is business as usual, if there is anything like that in this business and things continue. But if IRA is taken out, what would happen? Right? Obviously there are certain margin expectations that the business will have overall and we will continue to endeavor to get those margins by pressing all the potential levers. And that will include further indigenization in India, getting the cost down, making sure that those are the ones which we are supplying there, number one.
Number two, prices will also be looked at as an industry. I’m sure we will have a bit of a rationalization to take into account. Any major policy change gets absorbed and there is some sort of a price change that happens in the industry. So all of these things will play out into the future and the margins will be held onto From the. You also somewhere asked about the competition and therefore what would happen. One of the important factors to understand here is we are at the beginning of the whole solar story. Whether it’s in the us, whether it’s in India, whether it’s in Middle East, Africa, Australia, wherever. It’s just the beginning. And so we are actually going to see the size of the market itself grow quite substantially and it can take several quality players out into the future. We might see some consolidation. That’s quite inevitable. But quality players will be there out into the future and each one will have enough business just because of the size of the market.
Aashish Upganlawar
Yeah, but sir, don’t you think that profitability of the industry overall
Operator
In the queue for more questions?
Aashish Upganlawar
We’re discussing the same, same question. I think the answer is not complete as of now.
Operator
Okay, okay. Please go ahead.
Aashish Upganlawar
Yeah, so. So you. You’re saying that despite maybe capacities coming in or something going wrong with the ira, still the margins of the profitability will be maintained as the demand is going to be quite there, right? Is that the answer? Because it doesn’t seem to be adding.
Amit Paithankar
Okay, you have more or less got my answer. Let me paraphrase it. We will endeavor to keep the margins as they are today or maybe even better going forward using all the levers that we have as a company and as an industry.
Aashish Upganlawar
Okay, so probably you are pointing towards the cell capacities adding to your profitability.
Amit Paithankar
Everything we have sell as a lever. We have many levers. I talked about levers of profitability several times and we’ll use all those levers.
Aashish Upganlawar
Sir, would request a meeting with management representatives soon because we put the request, I think three, four months back. So we’ve not got any answers because these are key aspects to understand for investors regarding macros of the business. So that’s a request.
Sonal Shrivastava
We will be setting up meetings and you can get in touch with us ahead of investor relations. Surely, surely.
Aashish Upganlawar
Sure. Thank you.
Operator
Thank you. The next question is from the line of Nikhil Abiankar from UTI Mutual Funds. Please go ahead.
Nikhil Abhyankar
Yeah, so I just need a clarification on your comment earlier you mentioned that the sticky tenders, the recent techie tenders, have a lower domestic content requirement. So can you just elaborate that because my understanding was that with the introduction of ALCM, the DCI content will only go up.
Amit Paithankar
That’s absolutely right. From2026 onwards, with the introduction production of AMM for cells that will continue to grow. You’re right. I was referring to the situation as it stands today but out in the future. Yes. Atman Nirvan Bharat is an extremely important theme. And we will have a situation where we’ll have to manufacture more and more of energy related renewable energy related components within India.
Nikhil Abhyankar
Okay, sure. Thank you and all the best.
Amit Paithankar
Thanks. Nickel.
Operator
The next question is from the line of Balakrishna from Oman Investment Advisors. Please go ahead.
Balakrishna
Hi. Congratulations on the set of numbers. So I have some small confusion. I got in the order book. So whatever order book we are mentioning of 2004. So I think the prices of the selling price of the model are fixed like that. But in the recent discussions in this call I. I quite. I understood that the prices may be varied at the time of delivery. Is it right or am I missing something?
Amit Paithankar
You’re right. By and large you are right. Where the contracts are are based on certain pass through elements. These contracts may have a varying selling price at the time of delivery.
Balakrishna
Okay, fine. Then regarding this order book. So most probably we can execute in the next two years, right?
Amit Paithankar
Can you please come again on that?
Balakrishna
Regarding the order book which we have around 50,000 crores. So which is of we can execute in the next two years, right? We can complete that.
Amit Paithankar
You’re absolutely right. It has got orders all the way from now to gestation period of two years. Correct.
Balakrishna
Lastly, on this new vertical which we have invested like battery storage and electrolyzers and hydrogen production. So what is the rough estimate of the revenue potential of this 3, 4 verticals? Could you please give any rough idea? I don’t need any exact figure. Understand the potential. Would like to have the number of figures of each vertical.
Amit Paithankar
It’s kind of early days, Balakrishnan. For that these are based. The investment thesis is on the basis of a certain amount of requirement. But I think it is best to talk about those businesses once they start operating. And that would be a better time to talk about the revenue potential and the growth that you will see in those businesses.
Balakrishna
Okay, thank you.
Amit Paithankar
Thanks Bakshan.
Operator
The next question is from the line of Rohan from Elros Capital. Please go ahead.
Rohan
Good afternoon sir and congratulations on great set of numbers. Most of my questions have been answered. But just one question. There have been a lot of announcement around the cell plants. Cell capacity is being announced in excess of 100 gigawatt. I want you to address this is a critical question because I understand cell making is not that easy as we mentioned earlier also how much time will that take for 100 gigawatt kind of capacities announced by different players which are at announcement stage. How easy or difficult it is for such capacities to come easily in the market in next one or two years or will it? Or it will take really long time.
Amit Paithankar
So about 20 to 25 gigawatts of capacity should come online fairly quickly here because we know of plants which are kind of close to commissioning. But taking it to 100 gigawatts is actually going to take time. I think most of the additions of whatever cell capacities have been talked about now sort of add up to in the region of somewhere around 40 to 50 odd gigawatts. Like I said, these plants are not the easiest to construct. But of course they are not impossible. I mean several of the players have already done that. And so it really depends on the people, the expertise that the team builds, the project management skills that are brought onto the floor to get the execution done. So it really is a function of all of that. And we do believe that overall India will be a very important contributor to the cell industry, solar cell industry worldwide.
Rohan
Great. So then my next question comes to the point that India will continue to add around 30 to 35 GW in next 4 to 5 years till 2030 to achieve our target till 2030 and post ALCM implementation also then the addressable market size in India becomes 30 to 35 gigawatts. That means a 50, 60 gigawatt makes it completely demand supply neutral. So where do you think that these excess capacities which would come will be absorbed into what is your thought process around it?
Amit Paithankar
The world is my oyster, Rohan. We have a huge, as you see our order book outside of India is also very big. And all the manufacturers who have actually gone ahead and put their plans is also for a broader market. And mind you, India itself is growing in size. India itself is growing in size. In terms of market. If you have to reach to 250 gigawatts of solar power, solar by 220 30, it’s actually a much larger number. By the way, the asking rate will be in the region of 6070 in the out years. So there will still be a demand supply gap.
Rohan
Okay, so someone who puts in let’s say 10 gigawatts of how much can you manufacture? Okay,
Operator
Thank you. The next question is from the line of Rahul. The next question is from the line of Garvit Goyal from Invest Analytics Advisory llp. Please go ahead.
Garvit Goyal
Hi. Am I audible, sir?
Operator
Yes.
Amit Paithankar
Yes.
Garvit Goyal
Congrats for a good set of numbers. I just want to understand like if I add up your three quarter revenues, we are at a quarterly run rate of 3,500cr. Right? Going by that our annual revenue this year should be around 14,000 cr which is a growth of almost 22% only if over 25. So when we are saying that the demand is very robust and all. So does that mean we are facing some challenges in execution because our run rate seems to muted on quarterly basis.
Amit Paithankar
Well, we can talk about the definition of muted here. But you have seen our order book. What actually limits us is really the capacity which we are coming up, which is coming up all across the world including India at a very high speed. So I think the more factories we build to cater to our customers requirements, the faster will be able to cater to them and the faster growth will we be seeing.
Garvit Goyal
So are we like what kind of execution we are looking for in FY20? Just a follow up. Just a follow up to the reply. So just, just like what is the outlook for FY26 in terms of.
Sonal Shrivastava
We are not giving out outlook for FY26 as of now. But definitely I will point you towards our investor deck and if you can see there that the volume has jumped 48% versus last year. So that is an important metric to note. So and we’ve talked about on the prices and the raw materials and you look at that jump in volume along with the expansion and gross margin, I think you will have your answers in terms of how the market is heading.
Garvit Goyal
Got it. Thank you very much for all the best.
Operator
Thank you. The next question is from the line of Piyush Mehta from Capri’s investment managers. Please go ahead.
Piyush Mehta
Hi. Am I audible?
Amit Paithankar
Yes.
Piyush Mehta
Okay. Hi. So I think last part of questions on you know, overcapacity in the industry and you know, how we see the next few years shape up. But what I I wanted to understand is, you know, while we talk about overcapacity, if there is at all over the next few years, I think just wanted to understand the fundamental difference between the retail capacity and the average output from a particular facility. When I say that, say we have a 5 gigawatt capacity expansion coming up, what is the best case output that could come from it?
Amit Paithankar
So a great question asked. In fact, many people don’t realize that when we say a certain capacity it is for certain conditions and types of modules. And so therefore the actual capacity is actually depending on the type of modules that comes out, can be differing. You know, the same 10 GHz as an example, 10 GW would mean 8 GW depending on the type of module that you are manufacturing. And so it kind of varies. But it’s a great question because it’s a very ill understood thing in the industry.
Piyush Mehta
So for our capacity, which would be say largely top corn in terms of expansion, what is the usual output that we can expect in terms of capacity utilization
Amit Paithankar
In the of the rated capacity in the range of around 75 to 80%.
Piyush Mehta
75 to 80%. Okay, okay. And this is the same for the cell facility as well. The utilization
Amit Paithankar
Cell capacity could be a little different. It’ll be higher than that.
Piyush Mehta
Understood, Understood. Thank you so much.
Operator
Thank you. Ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to Mr. Amit Pat the other for the closing comments.
Amit Paithankar
Ladies and gentlemen, thank you very much for being with us asking all these very interesting questions. Some of them very challenging questions as well. But we really appreciate that challenge. Thank you very much for the interest. We appreciate your time. We appreciate the money you put into Vadi Energies Ltd. And would like to assure you that you are in safe hands. Thank you very much. Ladies and gentlemen.
Operator
Ladies and gentlemen, that brings us to the end of the conference. On behalf of Vargi Energies Limited, thank you. You may now disconnect your line.