Indosolar in talks with China`s GCL for $2 bln solar deal

"We are now in dialogue with GCL...with capacity having gone up to 360 megawatts (MW) by next year, we will drop (the old contract) and renew the contract for a larger volume and longer tenure," Venkataramani said.

"We are talking in terms of another four years (of wafer supply), that means to cover up to 2016," he added.

GCL-Poly is China's largest producer of polysilicon, a raw material used to make solar cells, and is 20 percent owned by China Investment Corp.

"Pricing can not be a firm pricing, it is linked to some indices...we are working on certain formula, based on certain indices," Venkataramani said

"In terms of value...it will be $1.5-$2 billion," he said.

Venkataramani said imports of wafers are unlikely to be banned by the government, despite a focus on domestic manufacturing, as apart from Lanco Infratech, no other Indian company has plans to set up significant wafer business.

"That (wafer) is likely to be imported for quite some time to come, there is no real plan in India for anybody to make such quantities of wafers which are required in the entire industry," he said.

Indosolar is also planning to get into manufacturing of solar modules to meet growing demand in the country's estimated $70 billion solar power market.

"We are contemplating to also get into modules to enlarge our footprint in the value chain, so that we are able to offer our customers both cells and also modules, because more and more developers in EPC, they are looking for modules," he said.

"Immediately we want to do that, because today in India, there is a lot of capacity available for modules."

India is building an initial capacity of 1 GW of solar power by 2013, enough to power close to 1 million homes. It would then add 3-10 GW by 2017, and hopes to grow that to 20 GW by 2022.

India currently has a peak-hour power deficit of about 14 percent. The renewables sector comprises 6 percent of India's total power mix.

Indosolar's capacity is now 160 MW of solar PV cells, which it expects to expand to 360 MW by second half of 2012.

PV modules directly convert sunlight into electricity, and make up the largest chunk of the solar market.

The company initially planned to build the new capacity in 2 phases, but but will now build it at one go at its Greater Noida plant on the outskirts of Delhi.

The company has lined up a consortium of banks led by Union Bank of India for loans of about 4 billion rupees for the expansion, Venkataramani said.

The additional project costs of about 2 billion rupees will be used from the cash generated during Indosolar's initial public offering last year, he added.

Indosolar posted a net loss of 661.7 million rupees for April-June, compared with a loss of 574.4 million rupees for the whole of FY11, but Venkataramani expects the company to start generating cash by FY13.

"There is quite some ups and downs in the industry at this point in time, its very difficult to make a very clear projection. But I think in 2 years from now, we should turn profitable," he added.

(Editing by Sunil Nair)