Hyderabad: Buoyed by a healthy order book of Rs220 crore for photovoltaic cells and solar products from Europe, telecom and energy products manufacturer XL Telecom & Energy Ltd is increasing capacity at its Hyderabad solar modules facility, spending up to Rs1,100 crore in the next five-six years, the company’s managing director Dinesh Kumar said.
To begin with, XL Telecom plans to take up a Rs305 crore expansion programme to set up a solar photovoltaic (SPV) cell facility with an annual capacity of 120MW on the city’s outskirts. “This is the largest capacity in the SPV cells manufacturing in the country so far,” Kumar said.
XL is also spending Rs40 crore to expand its existing SPV modules-making facility from 24MW to 65MW. To finance the expansion, it proposes to raise Rs160 crore by issuing foreign currency convertible bonds and the balance Rs140 crore as debt.
Clean Edge, a forecaster of use of environment-friendly technologies, has predicted that global demand for SPV products, which stood at more than $16 billion (Rs74,272 crore then) last year, could grow to $40 billion by 2010 and $65 billion by 2015.
Analysts are of the view that the growth in SPV products could pick up further on account of higher oil and gas prices, environmental concerns, aggressive subsidies and declining “solar” costs.
“Raw material makes up roughly 70% of the cost in the solar cell division. With approximately 80,000 tonnes of silicon capacity coming up globally by 2010, supply constraints are expected to ease and the price of silicon expected to drop from the second half of 2008,” Dilip Bhat and Nishna Biyani, research analysts at Mumbai-based broking firm Prabhudas Lilladher, wrote in a 29 August report.
But they point out that solar cell capacity is expected to far outstrip demand and this could squeeze prices significantly in the next two years. “However, favourable policy changes in the US and other developed markets can create fresh demand, quite difficult to now quantify,” they said.
XL Telecom expects its SPV cells facility to take off by June next year and start contributing revenues from 2008-09 onwards. “We are expecting our revenue to cross the Rs1,000 crore mark in 2008-09,” Kumar said. The company reported revenues of Rs523 crore in fiscal 2007.
Shares of XL Telecom rose 4.8% to Rs172.70 on the Bombay Stock Exchange on Monday, whose benchmark index, the Sensex, was up 0.68%.
The company, which went public in December last year to part-finance the existing solar modules facility to the tune of Rs59 crore, reported revenues of Rs431.8 crore from its telecom division and Rs93.3 crore from the energy business. It is now projecting a turnover of Rs650 crore for fiscal 2008, with Rs350 crore coming from the telecom division, Rs210 crore from solar modules and Rs90 crore from ethanol.
XL Telecom’s order book for the next three years stands at Rs570 crore, including Rs220 crore from SPV products, Rs300 crore for ethanol and Rs50 crore for telecom products, its executive director, K. Vasudeva Rao, said.
The company, which has its fuel ethanol plant at Nanded, Maharashtra, with a capacity of 150,000 litres per day, is also taking up a backward integration programme. It plans to set up a distillery to manufacture special denatured spirit, which is used as feedstock for ethanol production, at an investment of Rs65 crore. This project is set to take off by April next year, Kumar said.