Premier Energies expects to largely protect its margins despite a sharp rise in input costs, but smaller and non-integrated solar manufacturers are likely to be hit harder, the company's Chief Business Officer Vinay Rustagi told NDTV Profit.
"There is tremendous pressure on all the commodity costs, be they metals, polymers, the freight costs," Rustagi said. "All these costs are up between 10% to 30, 40, even 50% in some cases."
He called it "a challenge for all of us how to mitigate the impact of this cost increase and maintain our profitability."
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Premier, he said, is better placed because it is integrated. "More integrated players, such as ourselves, will be able to absorb some of this cost pressure, mitigate it, and pass on some of the costs to our consumers," he said.
Scale from the expanded cell business is also lowering procurement costs and adding operating leverage. "Our margin was nearly stable, and we expect the same, very broadly, going forward. Of course, on a quarterly basis, there will be variations."
Smaller players face a different picture. "The pain will be much more acute for smaller players and the players who are not integrated," Rustagi said, pointing to the previous quarter's results. Asked whether such pain could show up more visibly in the July-September quarter, he said the assessment was "absolutely right".
He would not forecast how long the pressure will last. "We are all hoping that the Middle East situation will improve, the war will come to an end, and we will see more stabilisation," he said. "Things are very, very volatile, and it is difficult to say at this point in time how Q3 or Q4 might play out."
Demand, however, remains firm. "The demand for solar in India continues to be strong," Rustagi said. Utility-scale solar is down about 25% from last year, he said, but rooftop solar has "absorbed the impact and in fact scaled up demand even further." The company's order book was about Rs 15,000 crore last quarter, and "order intake in this quarter has been again very strong."
On the new plant, he said: "This is a real milestone in the growth journey of the company. It is India's largest solar cell plant and makes us the largest cell manufacturer in India." Cell capacity has grown "by something like three times." With India implementing the second phase of its approved-models list for cells, "approximately 75% of the demand is going to be served by domestically made cells."
Asked what could worsen from here, Rustagi said: "Not much, to be honest." Expansion into transformers and batteries is on track, and he added: "Speaking purely from our company-specific point of view, I don't see much that could go wrong."
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