Moser Baer's photovoltaic unit to raise Rs 411 cr

Excerpts from CNBC-TV18’s exclusive interview with Yogesh Mathur:

Q: If you can take us through the plans outlined for the photovoltaic unit - in particular, we understand that you will get Rs 411 crore from some foreign investors. Can you give us some details on how much that might mean by way of divestment or offers of new shares?

A: We have raised our private equity capital from a consortium of international investors such as Nomura, IDFC Private Equity, Credit Suisse and Morgan Stanley.

We have actually had this business valued by them at well over Rs 6,000 crore, i.e. approximately USD 1.4 billion, resulting in a dilution effectively of about 6.5%. We see this as a basic capital requirement to fund our expansion plans in the crystalline silicon-based manufacturing on a high efficiency line as well as with respect to the expansion of thin film-module manufacturing and photovoltaic area.

Q: The photovoltaic is a fully-owned subsidiary of the company; does it work as a separate company?

A: Last year, we had raised USD 100 million of private equity on a structured basis; this is now on a dilution basis with the valuation of the business as well as a subsidiary and this will basically serve as an equity requirement to fund the expansion plans with respect to crystalline silicon and thin film intended exclusively for the photovoltaic subsidiary.

Q: Is Rs 411 crore the only sum that they require as of now, or are you looking at divesting something in the next six months?

A: We do have potential for additional funds but this fund is something that will substantially take care of the immediate requirement. We have said that we want to take our capacity for crystalline silicon from 80MW to 180MW and we have definitive project work in progress there. With respect to thin film, we want to raise the capacity from 40MW to a total of 180MW by the next financial year, which should go into substantially funding the equity part of that requirement.

Q: The management had earlier indicated some expansion plans of close to USD 700 million - this would be over and above that amount that you have obviously said. Is the amount of USD 700 million capex on track or are there any changes on that one as well?

A: The current year incremental expansion will be USD 400 million of capex for the projects that I have just mentioned. Some part of the equity that was raised last year plus what we have raised now, will substantially take care of the equity needs and we will also complete our borrowing on debt basis to cover the total capex.

Q: What is the timetable for the using up or reaching this entire Rs 6,350 crore that you are looking at for this unit?

A: The valuation of the business is Rs 6,000 crore for the purpose of calculating equity stake. But we are expanding the capacity from now to the early part of next year - expanding the capacity total of 300MW and that actually has revenue potential; you could calculate on an average of about USD 3-3.25 per watt. We are also saying that this is part of an overall expansion of thin film capacity beyond this level; we will expand by 565MW and the total would be more than 600MW.

Q: What is the timetable?

A: That timetable goes into 2011-2012.

Q: What kinds of revenues are you looking at from this unit?

A: Revenues from photovoltaic were about USD 40 million or so last year when it had just started on the silicon-base facility. This year we have started the initial manufacturing on the thin film facility as well. So now, we have a total capacity of approximately 120MW. Thin film will ramp up in the course of the current year and we ended last year with 40MW capacity for silicon which is now 80MW already and we are now starting to expand that to 180MW.

With the capacity that we have in the current year - silicon market price is at the range of USD 3.75-4 per megawatt and with respect to thin film, it is slightly lower. Therefore, as this expansion continues, we are looking at a turnover commensurate with that USD 120MW of capacity in the current year; and next year expanding it by another 120MW.

Q: Do you plan to list this subsidiary anytime soon?

A: This subsidiary is certainly amenable to be in public markets. At the moment, we are focusing on expansion and we do plan to go for listing at appropriate time. Right now our focus is on fulfilling capital needs.

Q: Can we look at it in FY09 or does one look at FY10?

A: That is an open question, and we will continuously evaluate depending on how the business is proceeding; the industry as well as capital markets.