Indosolar Ltd and China's GCL Solar System Ltd will jointly facilitate development of solar farms in India. Both the companies have entered into a memorandum of understanding for this.

Mr S. Venkataramani, Chief Executive Officer, Indosolar, told Business Line that “the scope of the cooperation includes joint marketing and business development in the area of solar power generation in India and meeting local content requirement for the National Solar Mission programme.”

GCL Solar System is a subsidiary of China's GCL Poly Energy Holdings. The company produces polysilicon ingots and wafers. Stating that Indosolar continues to be a PV cell manufacturer, he did not rule out the possibility of entering into PV module business in future.

Individual strengths

Asked if the two companies will be competing with each other, he said, “No, on the contrary, the cooperation will provide sustainable competitive advantage to grow in the market.

While Indosolar has proved its ability as a high quality and high volume manufacturer of PV Cells, GCL's strength is in ingots, wafers and solar power generation/EPC and so on. All these are critical for solar farm business.”

GCL and Indosolar already have a long-term supply contract of wafers since October 2010. Indosolar has an installed capacity of 160 MW to produces multi-crystalline cells. The company is in the process of increasing its capacity to 360 MW by installing another line of 200 MW. This expansion is to be completed by 2011.

Investment

The total investment involved in expansion is close to Rs 1,280 crore and is funded through IPO proceeds, promoters' equity and borrowings. Out of the Rs 357 crore raised through IPO Rs 200 crore is being used for expansion, promoters' equity is to the tune of Rs 220 crore, and borrowings of Rs 860 crore.

Currently, 75 per cent of the company's production is being exported to Taiwan, Europe, the US, Canada, and China.

“But, in next two-three years we expect to sell majority of our products in the domestic market. The requirement of use of local content under the National Mission will work as a stimulant,” he added.

On pricing of Solar PV, he said, “today, PV project cost is Rs 14-15 crore per MW and this has to come down by a half to achieve grid parity.”

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