Ladies and gentlemen, good day and welcome to Premier Energies Limited Q3 and FY25 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing * then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mohit Kumar from ICICI Securities. Thank you. And over to you, sir.
Thank you Manav. Good evening. On behalf of ICICI Securities, I welcome you all to the Q3FY25 earnings call of Premier Energies Limited. Today we have with us from the management Mr. Chiranjeev Saluja, Managing Director, Mr. Vinay Rustagi, Senior Director, Investor Relations and Mr. N.K. Khandelwal, CFO.
We'll begin with the opening remarks from the management followed by Q&A. Over to you, sir.
Thank you, Mohit. Am I audible? Yes, sir. Okay. Good evening everyone, and thank you all for joining us today at our second earnings call for Q3FY25. I am Chiranjeev Saluja, Managing Director of Premier Energies, and it is an honor to present our quarterly results. I am joined today by my colleague Mr. N.K. Khandelwal, Group CFO, and Vinay Rustagi, Senior Director. Premier Energies has clocked another quarter of outstanding operational and financial performance with excellent revenue and earnings growth for Q3FY25. The company has achieved a total revenue of INR 17,494 million as against INR 7,147 million in Q3FY24, marking 144.76% year-on-year increase. This growth is driven primarily by robust demand from the domestic market reflecting growing demand for solar power across different segments.
Our exports for this quarter were 3.44% of revenue and on a year to date basis 2.11%. Sure. Thank you. So I was on operating EBITDA for the quarter. It stood at INR 5,135 million compared to INR 1,232 million in Q3 FY24 exhibiting a growth of 316%. Operating EBITDA margin improved from 17.30% in Q3 FY24 to 29.97% in Q3 FY25. This improvement has come from our continuous focus on operational excellence, strong customer connect and cost optimization, our ability to efficiently ramp up capacity and meet the rising demand. The PAT for the quarter is at INR 2,552 million, showing a year on year growth of 490% in comparison to INR 432 million in the same period last year.
PAT margin improved from 6.05% in Q3FY24 to 14.59% in Q3FY25. The proceeds from our IPO have significantly strengthened our balance sheet. Our net debt to EBITDA ratio has fallen from 9.51 to 3.49 compared to the same quarter of last year. We are maintaining a net cash positive position for equity investment in our expansion projects. We remain very optimistic about solar sector growth prospects in India and worldwide. The sector is poised to grow strongly aided by rising demand across all segments, favorable government policy and improving technology. Our expansion plans include a one GW TOPCon cell and module line expected to be completed by Q1FY26 and a four GW TOPCon cell and module line expected to be completed by Q1FY27. With these facilities our total capacity would reach seven gigawatts per annum for solar cells and 9.1 gigawatts per annum for modules by June 2026.
Simultaneously, we have planned further backward integration into wafers with a two gigawatt per annum facility which is coming up and also this is targeted to be commissioned by FY26. Our aluminum frame manufacturing business with a 36,000 metric ton per annum facility to meet our full captive needs and to increase our share of total value addition and profitable margin. We remain focused on achieving timely completion of new projects which makes us well placed to benefit from the growing solar power demand. We are constantly strengthening our technical and operational capabilities to deliver value enhancing opportunities to our stakeholders. I look forward to sharing more details of our progress with all of you in years to come. Thank you and we are now open to questions.
Thank you sir. We will now begin the question and answer session.
Anyone who wishes to ask a question may press star and 1 on their Touch-Tone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets only while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have our first question from the line of Deepak Krishnan from Kotak Institutional Equities. Please go ahead.
Hi, sir. Am I audible? Yes, Deepak, you're audible. Yeah. Congratulations on a good show. Just wanted to sort of understand, first, on margin performance. So obviously with the LCC cell mix is, you know, favorable as well as utilization has gone up. But anything else from a cost perspective that would sort of work as a lever for us in this particular quarter?
I think it's mostly operational efficiency and plant utilization.
You see a significant uptake in the plant utilization factor. Cell plants take time to stabilize, as I've told, and as we keep running them, the operational efficiency goes up. And this is what you're seeing in, you know, utilization capacities.
Sure. And maybe just wanted to sort of. Maybe this is our N.K., sir. More just wanted to understand. So if I look at Q2 versus Q3, our other expenses was closer to, you know, about INR 193 crores last quarter has come down to about INR 107 crores this quarter. So you know, which number is sort of a more normalized number to sort of look at from a regular basis. And anything either in the base quarter or this quarter that you want to sort of call out as, you know, some gain or, you know, maybe the previous quarter at some item provision or anything of that sort.
Anything that you would like to call out?
Yeah. Your question was on the other expenses, right?
Yes.
Yeah. So I think we had explained in the last quarter that we had kept provisions for warranty, which was a, you know, provision put in that quarter and hence you see that difference.
So I would say this quarter number is a more regular steady state number to kind of. Sure. And maybe just wanted to look at the order book as well. The INR 69 billion order book that we have.
Yes.
What would be the sort of. Because if I sort of take a, you know, $0.15 realization, I roughly get, you know, two gigawatts of modules and 2.6 GW of cells similar to the number that you've indicated. Any rough timeline in terms of when this entire book will sort of get executed?
Yeah.
So most of the orders are, you know, having a cycle of not more than 12 to 15 months. In our investor presentation, we have also shown what the order book was in September. And what is the volume sold in the new orders. So you see a positive uptick there where the volume sold was 17,110 million as against order book of 22,399 million.
Sure. Maybe just one final question. How was a sort of DCR module and cell prices trending on a QoQ basis? We see, there is a certain uptick on the cell price front but maybe not that much on modules. Just wanted to sort of reconfirm that.
So it's not. There's not been a significant uptick as such. Prices are quite stable and the demand also is very, very strong. So we are not seeing any significant change as such. Quarter on quarter.
Sure, sir, those are my questions. I'll get back to Deepak.
Thank you.
Thank you. We have our next question from the line of Aman Jain from Bernstein. Please go ahead.
Yeah. Hi, sir. Congratulations and thank you for taking my questions. So I have two questions. First, rooftop solar, if you can give some color, like how much is it contributing to our domestic sales?
So you're talking about the rooftop solar market or in terms of. As far as we are concerned, whether it's rooftop solar or it is KUSUM, it's a DCR product which is a domestic content requirement product. The DCR rooftop demand also is increasing. I think Vinay can throw some light on the size of the whole DCR program. Vinay? Vinay, are you there?
Hi, can you hear me?
Yes.
Yeah, hi Aman.
So you know, just to kind of give you an idea about the rooftop solar market size, the PM Surya Ghar: Muft Bijli Yojana has a target, we believe of about 25-30 GW to be implemented by FY26. Although we think that that scheme might kind of just roll over for one or two more years this year. So far we've already seen 8.5 lakh installations. We expect the annual pace to pick up to about 20 lakh installations over the next year onwards. So that should be a market size of 6-7 gigawatts in the residential side. On top of that I will add, I would say about 2.5-3 gigawatts on the corporate side. So we do expect the rooftop market alone in India to touch about 9-10 gigawatts over the next one to two years. Yes.
For current sales, how much is it contributing to rooftop solar of our domestic sales currently, how much is it? How much is going to rooftop solar in terms of percentage or any figure that you can get?
So it's very difficult to track that because we sell solar panels to various integrators. But if you ask me for a number out of our DCR sales today, rooftop could be around 25% but it's significantly growing.
Got it, got it. Thank you. And my second question, like in terms of order, in terms of execution, if you can give some color so supposedly by the time of delivery if the input prices go up. So how the order book is executed, is it indexed to some variable and does that, do the customers have an option to exit? Is it binding? And you can throw some color over there.
Most of the contracts which are signed by others in the industry, most of these orders are wafer variable. If it's a Non-DCR, it is a cell variable and it's mostly on a dollar cent. So even the currency is variable. So I think 90% of the industry works on this. There are some small spot orders where you don't have this. So most of them have the variable contract.
Okay. And do the customers have an option to exit or the orders are binding?
So it depends. The customer, if he's entering into a long-term contract, then he will, based on the contract, you know, have an option to exit or to continue. So it depends from customer to customer based on volume, based on the tenure. Yeah.
So, Aman, as I was telling you, it depends on the tenure of the contract, the quantum, the advance which we have got from them. So it's not. It depends on the contract. If it's not a very large but a very long contract and if it doesn't have significant advance then of course they could back up. But most of the contracts which we have signed are all firm contracts. The order book which you see in the presentation is firm with advances received. We have not taken any framework contract into our order book.
Got it, Got it. Thank you so much sir for your answer.
Thank you.
Thank you. We have a next question from the line of Nitin Arora from Axis Mutual Fund. Please go ahead.
Hi sir, good evening, thanks for taking my question. Hi sir.
So just first question on the order book because it has been a very strong order intake. How has been. I'm sure you must be doing that checks where the land bank has been given or not. So in the current order book, you know, how's your assessment in terms of you know the developer land bank is pretty much is owned with them and how much is your visibility there? That is first and second with respect to inquiries as you started the call saying there are a lot of inquiries happening and demand is pretty strong. Can you throw some light across segment with respect to DCR? Because also because you know the if a developer is bidding today he must be keeping in mind that he has to take the cell from the domestic player as only.
So in that context, you know, the question was more that are the capacities have come up recently because we don't see much capacity on the cell side coming up. I mean, except you, which you are saying you will commission in Q1. So, you know, just to get a little bit sense on the pricing side with demand is so strong and not much enough, capacities are still coming on stream though everyone is talking about it. How do you see that scenario over the next one or two years from the capacity angle as well? Then I have two more questions. Thank you.
Sure. So first is on the developers. We generally work with large developers.
Most of these developers are backed by large fund houses, and of course we do, you know, do our due diligence to ensure that even developers themselves would make sure that they have everything in place before they place order for modules or get into contracts because modules is the last thing to come out of the site. And yes, there are issues in some places where, you know, the goods are ready and the sites are not ready. So this is an ongoing process, but it's not a significant issue for us, and we do take care to ensure that the developers are also on track with their EPC and their land progress coming to the DCR demand and the capacity. We are seeing substantial progress with the demand from the government side. I agree with you that a lot of cell lines are not coming.
It's not easy to set up cell lines. This is what we have been saying from the starting that it's not easy to set up cell lines. But then there are companies which have been working on it. So Tata has already come up, Waaree has announced trial runs for the cell lines. So this is work in progress and we feel that this should not be a challenge with ALMM List 2 coming up in June 2026. But then, yes, not all lines would come up, not all announcements would be successful. But then we are seeing the positive direction that people are announcing and work is in progress.
Got it. Just last question on this global front, I know there are a lot of noises happening with respect to Trump removing the Inflation Reduction Act and IRA for the renewables as well.
Can you throw some light on that, you know, let's say before the IRA, you know, how much the industry used to do there on a rough sense, because we get this number closer to about 30 gigawatt sort of, you can correct me if I'm wrong. And when we look at the capacity, cell capacity only for U.S., because he's already banned China, Mexico and other countries. Only for U.S. though there are a lot of announcements. But when we look at the commissioned capacities is hardly in numbers. So if you can correct me on that.
Trump has put a pause on the IRA. He's not canceled it. And second is I think we need to give time to the new regime in the U.S. to settle down. I think we do understand that there are.
No, no, you're audible sir, please go ahead.
Yeah, so.
So we need to give time. You know, we are also navigating issues but what we need to understand is we as a company, our year to date exposure on US market is only 2.11% because we have a better realization and we want to focus more on country rather than come. Yes, could be. Could we get the question please, sir?
Basically the question was more on the. Before the IR, you know. Yes, you were talking about the IRA. As I said before the IRA. What we have seen is, as you said rightly manufacturing capacity in the US has come up into 25 to 30 gigawatt per modules. But for cell the capacity is insignificant.
We are aligned with you on that, and which also means there is a good opportunity for export to the U.S. and the IRA incentive, which has been paused, only delays manufacturing to come up in the U.S. It doesn't reduce the market size as such, so there is demand in the U.S. and the U.S. has been doing about 20-25 gigawatts year on year in terms of deployment, but I think we should wait and watch and it doesn't affect us as a company, but we will be monitoring the situation, and this is the reason why we have kept our cell line investment in the U.S. under review because we will wait for clarity before we spend any money on the cell line.
That's helpful, sir, thank you very much. I'll come back in the queue.
I mean just to add to that, of course the cell capacity in the U.S. is very, very limited. But then you have the thin film module maker First Solar, which has a capacity I think of more than 10 gigawatts. So there is some supply that is coming from First Solar. This way. That's it. Thank you.
Thank you. We have our next question from the line of Nidhi Shah from ICICI Securities. Please go ahead.
Thank you so much for taking my question. I would also like to congratulate you on a great set of results. My first question is that we know that the ALMM is to be implemented from June 2025, but has the process of collating the list started and by when can we expect the list to be out and what should the process look like?
So do you want to take this question, Vinay?
Yeah, I can do that. So no, the process has not started. I think we will see a growing number of capacities come online over the next year or so. Typically the process of enlistment and approval for ALMM takes anything between three to six months. Given that the whole process is expected to kick in from June next year, we expect the government to start collecting this data sometime towards the end of this year.
Okay, thank you so much. My, my last question would be that the 1 gigawatt TOPCon line. I can see from your presentation that we have delayed the commissioning by one quarter. What is the reason for that and are we facing any delays or issues in getting equipment and things like that?
So no, we are not facing any issues in getting equipment.
There has been a marginal delay. Originally we had said March of this year. We are now expecting it to happen sometime in around mid-May or maybe end of April. So we have to be transparent with the market. We shared the revised marginal delay.
All right, thank you so much and all the best for the rest of the year.
Thank you, Nidhi.
Thank you, sir. We have our next question from the line of Sanjay Mookim from JP Morgan. Please go ahead.
Thank you. Good evening.
Good evening, Sanjay.
Yes, good evening. A couple of questions on the numbers. If I read the presentation right, there's been a sharp increase in the net debt number. QoQ, could you talk us through that?
So I think the net debt number would have gone up because of the deployment of the one gigawatt facility, right? NK can take this question.
Yeah. So there is an increase in net debt number primarily because of the method of calculation. Earlier we had actually considered and reduced the IPO proceeds also. But that was not a correct depiction. So this time we have not removed IPO proceeds from the total debt because it is for a project-specific requirement. Sorry, just to clarify that Mr. K, so when you say the net debt number is INR 1,917-odd crores, you probably have IPO proceeds of INR 1,200 crores. So. If I were to subtract that the net debt is somewhere around INR 700 crores, right? On a balance sheet.
Yeah, I see. And you've been advised not to remove that cash, is there? I've not seen.
No, because it is raised for a project-specific requirement and it has to be parked separately for usage into that particular project.
Last time when we released the numbers, that time we had reduced it from the overall debt. So there is a difference in the method of calculation of net debt.
Okay, if I may just follow up on the detail a little bit. This money was received in early September, right?
Yes.
But if I look at the net debt. Yes. If I look at the presentation, the net debt end Q1 and net debt Q2 is flat. I mean that could have gone down if you had added the money from the IPO.
Which one? Q2 and Q3. You are comparing, right?
Q1 and Q2.
Q1 and Q2. Yes. If you would add 42. Yes. Shouldn't Q3 842 versus 1017 at the end of Q2? So if you added the IPO money back then shouldn't Q2 number have been much lower? No, we had not.
No, we had actually reduced last time. So it was coming negative. I think just see this, right? It was negative last time it was negative. That's what you are saying now. And this time it has gone up. Yeah, the size it has went up between June and September. The net debt number, even though you think that the IPO money was added, which you have now removed. Okay, let me take the numbers correctly once again and then I'll come back to you. Sure. Thank you. The second question again on the P&L the depreciation seems to have gone up noticeably in Q2. Has there been some commissioning? Yeah. So I can answer this question.
The depreciation again has been a management call on the terms of the life of the equipment, in terms of technology, in terms of raw material availability, and management has taken a conscious call on depreciation numbers on the wafer only equipment you've reviewed. Useful life assumptions, is it? Yeah, it's based on useful life, on technology, on availability of raw materials. So a lot of factors have been taken into while arriving at this. Right. Thank you. Swati. Just one question on the ALMM list too in follow up to the earlier query if the list is not yet ready, but I understand that people who are now bidding will have to incorporate DCR requirements. How does a developer decide who to buy from? The list is not. Yeah.
So developers have already started contacting cell manufacturers and developers are also talking to companies who have announced cell manufacturing and it has been a very clear direction. Unlike the ALMM which was announced for the module, this time the ministry has been very clear that please take into account that you have to use cells made in India and appropriately, you know, bid for the PPAs. So developers have understood this point and they have, you know, been discussing with manufacturers like us and accordingly putting in their bids for the PPA. Right. And so this is on the assumption that any developer make that if you are making in India, you will be on a level business. Yes. If you are already a cell manufacturer then obviously we'll be in the list. Okay, thank you. Those were my questions. Thank you very much.
We'll come back to you on that question with N.K. Just checking. That will be very useful. Thank you. Sure. Thank you. We have our next question from the line of Gopal from SBI Life Insurance. Please go ahead. Hi sir. Thanks a lot. Yeah. One of the question was on this net debt only. So whenever you are able to clarify, please clarify on that. And second one, in this current order book, what will be the export percentage? Our export percentage is going to be limited to 3% because as I told earlier, we are committed to Indian market. So we will be restricting our exports even though there is a significant demand from the US. But the management by choice is very clear that focus is dedicated towards Indian market. And there is a very strong demand here. So we will limit it below 3%.
We had a plan to invest in the U.S. for cell manufacturing. Yes, we still have this plan. We have just put it under review because we are waiting for the, you know, regime in the U.S. to settle down and be clear on what they want to do. As of now we have only heard and read that IRA has been paused by the Trump administration. We are hearing a lot of statements but we still do not have clarity. As a company we have taken a conscious decision not to move ahead until we get full clarity on this topic. Sir, on order book side, would you be able to give some color in terms of breakup between module, cell and EPC? It's already given in the presentation. I think about 30-odd% is for sales which is already shown in the order book.
36% is for sales, 1% for EPC and 63% for module. The module order book would also include Non-DCR and DCR modules both. Okay. And so this order starting point of September 2024 is INR 6,400 crore. Yes. And then there is a given INR 6,200 crore order book. Pardon me, could you repeat that last quarter presentation? It shows INR 6,200 crore order book. Okay, let me just check that number in the last presentation and come back to you. That was one and second was. It was. I'm sure that's a very crude way to calculate. I was just calculating the, you know, average per megawatt on order book. But this is like you know, down by 2-3% quarter on quarter.
There is no change in the pricing, as we have mentioned, so there is no significant change in the pricing, which I had answered this question earlier. Also, the market looks to be quite stable. In fact, in the non-DCR segment, there is a slight increase in the pricing because of duty imposed on glass. Overall, the pricing has gone up a little bit in both DCR module and non-DCR module because glass duty has been a pass-through for us, and hence there is a slight increase rather than a decrease. Even in China, we are seeing now prices have started going up. They were all-time low. We are now seeing an increase in prices in China. The gap between Indian modules and Chinese modules is gradually reducing because China has now started increasing prices.
Sir, in terms of revenue mix, this around 25-30% from cell. This is the right assumption to take for next year or it will increase in the financial year 2026. So it depends, it's market dependent as of now this is what is shown in the order book matrix. But yeah it depends it could change. Okay. And would you give some guidance on EBITDA margins for 2026 and 2027? Sorry, could you repeat that question? EBITDA margin guidance for FY 2026 and 2027 as a policy we do not give any guidance. You have been seeing our performance and you know the company and the management is all working towards the best performance. We generally do not give any guidance as a board policy.
Okay, and the question on that order book. I think that was not for the 30th of September. That was for it. It was for November 1st because not for September. The number which you're seeing, the 6,200 numbers, was as of November not September. Yeah, sure. Thanks a lot. Thank you. We have our next question from the line of Mayur Patel from 360 ONE Asset Management. Please go ahead. Hi, thanks for the opportunity. Great set of numbers and the team. So just one. Most of the things got covered. This one question. INR 6,900 crores order book. Shall we assume that this is at the current. So like you delivered around 30% margins in this quarter and it's a function of whatever cost but also a function of the price of modules in DCR and non-DCR and the price of cells which goes largely. So it is.
Shall we assume these orders. These orders are also at the current price and if you want to model it according to earnings for next year we can do it that way. Again it would be a you know a guidance for future. So I'd like to avoid that. But as you see quarter on quarter we have been in the range of between 25 to 30. As what you're seeing today's results, that could be an indicator, you know, that we'll be in this range. Okay, got it. Fine. Thanks. I don't have any other questions. And all the best Chiranjeev, you have a very strong set of numbers. Thank you. Thank you so much. Thank you. Yeah. Our next question from the line of Gurnesh. Please go ahead, Mr. Gurnesh. We'll move on to the next participant from the line of Piyush Tejwani from Sundaram Alternates, please go ahead.
Thank you for the opportunity and congrats for a great set of numbers. Thank you. Piyush, my first question is on the pricing on Mono PERC. I think you mentioned that they're seeing that it is again going up. So just wanted to understand that is it a complete pass through for us or would we have an impact? Yes, as I said, almost 90% of our order book is passed through. There are some orders just wanted, but otherwise, you know, when we sign up any contracts for DCR cell, the wafer is the pass through. When we sign up contracts for DCR module, there again wafer is a pass through. And when we sign up non DCR orders, the cell is a pass through. So and this is an industry norm, it's not something which Premier is doing because of the volatility. You know, it's generally a pass through.
My next question is on the depreciation. I understand that. I think 1 gigawatt of module is getting. To understand your question. Could you repeat it? Because your voice is smudging. Could you repeat that again? One gigawatt of cell and one gigawatt of module I think is getting capitalized in the first quarter. Can you help me understand what would be the amount that would be capitalized and useful life for that? So it's a TOPCon cell line, the 1 gigawatt of cell line. The spend budget is, you know, generally it's about 600 and odd crores per cell line. Could you give the CapEx numbers for 1 gigawatt of cell and 1 gigawatt module and then module is about 175 crores and useful life. So generally we, I mean being a TOPCon line, generally we take useful life to be about five years.
We generally depreciate our equipment in five years, sometimes even earlier. Management takes a call based on the useful life of the equipment and on technology. But generally we take five years. The total investment, the numbers which you were talking about, the INR 6,694 million for cell line and INR 1,523 million for module line. Sure sir. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to two questions per participation. Participants, should you have a follow-up questions, we request you to rejoin the queue. The next question is from the lineup, Shivanshu Gupta, an individual investor. Please go ahead. Hi sir. Am I audible? Yes, you're audible. Yes. Hi sir, I am one of the investors from IPO. Thank you for taking my question.
I wanted to understand in terms of capacity utilization in the slide 21. So like leaving aside the new CapEx plans, are we at a peak capacity utilization for cells and modules? For module there is still some scope. But for cell we are almost at the peak in this quarter. Understood. And for the order book guidance, you said most of it is domestic. Over 95%. Over 97% is domestic. Yeah. As a company we generally are below 3% for exports. Year to date as of today is 2.11%. Understood. Thank you. Thank you. We have our next question from the line of Swati Jhunjhunwala from JM Financial. Please go ahead. Yes, thanks for taking the question sir. On exports, I think I missed it.
Do you see exports to go very big now that you know what the local environment is like or do you expect it to stay at this level? Because on a YTD basis we've degrown by close to 70%. So that's my fourth question on. Yeah, so as I have stated earlier that we as a company have taken a conscious call that we want to serve the country first and we give priority to domestic orders. And our focus has always been to make sure that we are, you know, making, you know, the products available for the government sponsored projects in India. That's a priority for us. All our capacity expansion is also planned keeping in mind the domestic demand. So as of now, this is where our focus is which we want to retain.
You know, ensure that, you know, our exports are not more than 3% on an annual basis. But going forward as capacity is built up in, you know, India and maybe the demand in US is very strong, we would take an appropriate call at that time. Understood. And sir, second on the net debt part, I think I understood what the delta of that INR 1,291 crore was versus you know, in Q2, what you had reported versus right now. Just wanted to understand if you are not deducting the IPO proceeds from the net debt as of now what does this, I mean what does that pertain to? Since that INR 91 crore is for a specific project. So if you could just break down the net debt. If you could.
Because obviously something like this INR 1,900 crores should come down by INR 1,291 crores to give us sort of INR 600 crores net debt. So yeah, I think we had parked this question for our groups here for NK to come back. We will come back to you on this question. All right. And lastly on order book, so could you give order book number of last year, December, that is 2023. December Q3, FY24. I have to pick out that number. December 23rd, the book number. Yeah. We will make a note of this and we will respond to you. Sure. All right, thank you. We have our next question from the line of Akash Mehta from Canara HSBC Life Insurance. Please go ahead. Hi sir, congratulations on good set of number. Thank you so much. Yeah. So just one question.
In terms of the new cell and module capacity which is kind of coming through of one gigawatt each, how do you see the ramp up happening? I mean, will the cell capacity kind of take a similar timeline in terms of ramping up in terms of utilization or it will be faster than what we have seen previously? No. So we will of course replicate or be a little better than what we have done in the past. Because of the experienced team and the 14 years of knowledge which our team and our company has on cell manufacturing. We have projected that we will be able to commission and ramp up within three months of commissioning. We are looking at a mid-May commissioning and ramping up our production within three months of that, and then of course it takes time.
We would not reach 96% in the first quarter. It's going to be gradual. But we will try to better what we have done in the past. It should be better than that. So I mean we can, we can see at least, I mean more than 50-60% after 1/4. I mean that's what we can. Yeah, of course. It's a safe number to assume. Okay. Okay. That's it from my side. Thank you. Thank you. Thank you. We have our next question from the line of Chaitanya Jhunjhunwala from Groww Mutual Fund. Please go ahead. Yes. Thanks for the opportunity and congrats for the great set of numbers. Thank you. Yeah, I had a question on the provision side. So basically last quarter we had taken an ad hoc provision for the warranty. Right.
So I wanted to ask whether we are taking this provision regularly because the model. No. Every module, but every module that you manufacture has an inherent provision for warranty. Right. So it depends. Some customers offer third party insurance where warranty is already covered under the third party insurance program and some don't. So management had taken a call for that provision in last quarter. We do not need to put in a similar number every quarter. Okay, sir, understood. Thanks a lot. Thank you. We have our next question from the line of Bharani from Avendus Spark. Please go ahead. Yeah, good evening. I'm just trying to. Sorry to interrupt, sir. Can you please be a little louder? Is it better now? Yes, I can hear you. Yeah, yeah, sorry.
Yeah, so I just want to understand the rationale behind the basic customs duty cut the government has done on cells and modules. And how it will impact our prices. So we don't see any change in the customs duty. I think what the government has done in the recent budget is that the duty on cell remains as it was. It has just been bifurcated. I think I leave this question to Vinay. He'll be able to answer this better. Vinay on the customs duty case? Yeah, sure. So as said, there is no effective change in the level of duty which has to be paid by the importers. All that the government has done, they have reduced BCD on various items to basically cut the number of slabs of BCD. This is some kind of a tax reform.
But all the reduction in the BCD that you see on cells and modules is basically offset by an equivalent amount of levy of an agricultural slab. So effectively the total amount of duty that the importers have to pay remains the same, which is 44% net on modules and 27.5% on sales. Okay. So essentially the impact on our, say, attractiveness from price point of view compared to China, you know, remains the same before the announcement. Yes. There is no change in the economics either for the buyer or for the seller. It is just a definitional tweak in terms of how the different duties are structured and named. Yeah, understood. My second question is kind of numbers. I want on demand in, say, India and USA.
So apologies if it is basic, but could you spell out what could be the annual demand for modules from India and if you can split that between DCR and non-DCR and what could it be in US? I think Vinay, you should take this question also. So if you see the historic numbers, India did a record capacity, the addition of about 24 GW AC in the last calendar year, that is 2024, that is equivalent to a total demand of about I would say somewhat north of 30 gigawatts over the year. We expect that number to grow by about 15%-20% year on year over the next three to five years. So we are basically looking at a demand, a module demand of something close to like 50 gigawatts during this period.
In the U.S., the scenario is not so clear because of the policy confusion. You know what, whether IRA is applicable, which parts of IRA remain applicable or not. The annual demand in the U.S. has been about 25-30 GW over the last few years. This year onwards we are not very clear. We kind of are waiting for the policy clarifications to emerge only after which we can know about likely demand from the U.S. Okay, follow up to that question. Of the 30 gigawatt annual DC demand, how much would be DCR? How much will be non-DCR? If you look at the market on an annual basis currently there is, I would say looking at the new year 2025, we expect about 5 + gigawatts of DCR demand to come from the residential rooftop market.
We expect, I would say between 8 to 10 gigawatts of demand to come from the KUSUM market, the agricultural solar market and a few more gigawatts to come from the PSU market and some specific projects of the government. Having said that, you know if ALMM is implemented from next year June 2026 onwards as the plan is, then the entire market is going to turn into a DCR market in a matter of less than one and a half years. Sure, that is clear. I'll call back in the queue. Thank you so much. Thank you. We have our next question from the line of Pratik Kumar from Jefferies. Please go ahead. Yeah, good evening sir and congrats for. Great. My first question is on your order book. When you say order book, what defines it? Is it the advances or is it some kind of MoU?
How do you define your order book? Yeah, so let me clearly state that all our order book is firm order book with advances received. We never has a policy put in anything in the order book which is even a framework agreement which can be cancelled. So it's all firm order book, contract signed with advances and it's not a framework or an MOU. Right. And these advances will amount to like how much percentage of the value of the product. Generally it depends from contract to contract. It would anywhere range between 5%-20%. So it depends on the quantum, it depends on the delivery timelines. My other question is on your, I mean the technology transfer from China. So you're talking about to be about commissioning of wafer and maybe like looking for more projects in that segment.
But is there any technology transfer issues which have been like sort of talked about in media there from China in the segment? So yeah, we have also heard of some issues. Our wafer manufacturing is with the Taiwanese partners. So we don't have a technology issue here. But yes, we have heard of certain issues on equipment supply from China. There are certain vendors who said that, you know, government is really pushing for not selling equipment to India but you could sell it to any other country that there are certain vendors of equipment in China who say we have no problem. So there is no clarity on that. We have not faced any significant issue and we have been getting our equipment and we will navigate issues as and when they come up.
Because a lot of equipment suppliers now in China are setting up shop in Vietnam, in Malaysia, in different parts of Southeast Asia and I think we don't see a major threat there as of now. Thank you. The last question on ALMM, so June 26th is the timeline but ALMM got delayed by one year because of non-readiness for the industry. The capacity additions for solar remains low at this point. Is there any chance of like the timeline also getting like sort of delayed if the industry capacity is not online? I would not say no. There could be a possibility that the ALMM gets postponed by six months but that would not mean any kind of exemption. It would only be an additional timeline given to developers to commission their projects.
Because the government has given clear, you know, it's been very clear in their guidelines that they have to consider Indian made cell. I mean just to add to that, you know, ALMM 1 obviously was in new policy and created a lot of confusion in the market and disruption for both module suppliers as well as for the customer end customer that is the IPP. And I think what has happened is that the government has got a lot of feedback from the market or stakeholders on implementing ALMM 2 and they have issued a much clearer set of guidelines on how this is to be implemented including for example for saying that all projects which have been paid after December 2024 will have to comply with ALMM 2. So there is a pretty forward looking guidance.
There is also a reasonable confidence that you know, given all the plans by all these companies as part of the PLI scheme or otherwise they'll be, you know, there is a significant amount of capacity addition coming on the cell side. So you know, obviously one can never rule out whether the policy, you know, what will happen to the policy in future. But we expect a much clearer thinking on part of the government and not to have anything like the kind of confusion that we saw with ALMM. Sure. Thank you sir. These are my questions. Thank you. We have our next question from the line of Subramanian Yadav from SBI Life Insurance. Please go ahead. Just wanted to understand on the capacity utilization of these cells why there has been a sudden increase from 77% to 96%. And how sustainable is this 96% number?
96 number is sustainable. As I've told earlier, cell lines take time to stabilize and it's a process driven industry. There is another reason for these percentage of utilization to go up also because China has moved from M10 wafers to M10+ or what they call is the M10R wafer, which is a larger format wafer and hence the wattage output, what we get from the same wafer is about, you know, 4 to 5% higher than what a normal M10 wafer would give. This also contributed in the utilization because you're seeing the utilization in percentage. In megawatt terms, every cell on an M10 wafer is slightly higher on the watt peak compared to an M10 wafer. Our guidance is that this will be now the norm. Plus or minus, you know, 1 or 2% is what we are going to be achieving.
Okay, and what about the modules? Are from 74 to what would be our peak in that? So on module lines we have seen that, you know, you need to actually change the product mix. People are still buying different watt peak of modules. Some people are. There is a demand for Mono PERC and TOPCon and then there's somebody wants Glass-Glass and somebody wants monofacial. So when you do these changeovers you lose efficiency in the module line. But based on customer orders we need to do that. So module line is a different beast compared to separate cell line. And because in cell line you're just producing one format of wafer continuously and then you keep so modeling also we see that there should be a little bit of increase, but it will not be so significant. Okay, okay, fine. But we can take a session.
And also in cell line, if you see our number who had dropped from 82% to 71% and then it's gone up to 77% has gone up to 96%. Because the format of the wafer changed. Okay. Okay. So when the wafer format changed, it took time to stabilize the lines again. Okay. So for this wafer change would be happening frequently. Right. Then it would be very difficult for us to maintain this 95% capability, right? No, I would say no. Because in this format if Mono PERC, this is what is the norm now, M10+. Beyond this, if there's any change, it will only happen in TOPCon lines. Okay. Okay. And so on the module front, what would be the utilization? We are, we are estimating it to be around 80-82%. 80-82%. Thank you. Thank you.
We have our last question from the line of Vipraw Srivastava from PhillipCapital. Please go ahead. Hi, I'm audible, right? Yes, you are audible, right. Two questions. Firstly on why the gross margins have declined by 300 basis points for this quarter. Just a second please. Sure. Which slide are you referring to in the presentation? I'm talking about gross margin, sir. It's the. If you calculate gross margins after subtracting cost of goods sold, the gross margins. So it's 30. It's 38% for this quarter. It was 41% for last quarter. Roughly. So roughly at 350 times. Yeah, yeah. So you're talking about material margin, is it? Exactly. Yes, yes, yes would be because of various factors. We have to come back to you. You know the Forex has gone up and also material movement, you know, raw material prices. Sometimes in some cases there is volatility.
Okay, let's not give a correct number quarterly because is there prices on a weighted average basis? Yeah. So is the trend in sale price declining in DCR because your cell mix has also gone up QoQ because of that has the gross margins come down? The sell prices in DCR market are not declining. They are similar to what they were. They could be a change of maybe, you know, 2% here or there. There's no decline we are seeing in cell margin as of now. Sure, sir. And so last question. One of your clients, Shakti Pumps in the con call has been highlighting that they could be facing shortage on PM KUSUM because of shortage of DCR module plus very high DCR module prices. So any thoughts on that? So DCR module prices went up slightly because of the import duty put on glass.
This is something which was a pass through for all our customers. You know, because of the glass duty these prices have gone up by almost about INR 0.80 or $0.01 per watt. I think Shakti has even updated something today. If you would have seen that they have secured a substantial portion of their DCR requirement and they of course continue to buy. Yeah. Yes. Which is positive for them. Right? Right. But you don't see a slowdown happening on PM KUSUM because of this? I mean, thoughts on that? No. You know, what has happened is I don't see any slowdown. The problem with PM KUSUM scheme, unlike the Surya is generally the PM KUSUM scheme is dependent on the tenders which have been coming out by the respective states.
And we have generally seen that all, you know, these kind of projects there is, you know, not a stable demand every quarter. And everybody wakes up in the last four months. Right. And everybody wants to achieve the maximum what they can for the funds to be utilized before they expire in March and then they are reinstated. So we have seen this issue come up only in the last quarter. So substantial portion. A lot of our customers who had signed annual contracts from us failed to buy the material what they promised in respective quarters by over 15%-20%. It didn't matter to us because there was a lot of demand. And then suddenly in the last quarter there has been an unprecedented demand because everybody wants to catch up. So I don't see any shortage.
If people plan properly and you know, deployment happens. Now this is not the case in PM KUSUM because PM KUSUM is spread over, you know, individual customers. Right. They are not running under the pressure of receivables from respective states and projects slow down because of this. I think. There are two different programs but we don't see any stoppage. There is a substantial availability. Then lastly, because of the Shakti Pumps thing, you don't see any issue with receivables. Can that be problem if their execution doesn't happen? Can that be a potential problem? The demand is so high that I don't see that as a problem at all. Even the government has, I think Vinay, you could throw some light on the payment process mechanism which the government has made some great efforts and great improvement.
Actually the payment provisions in KUSUM scheme have been substantially improved. Now the government, the central government makes money available subject to the state government putting up their share of the funds, which is typically 30, 30 or 30, 40% of the total project cost. I'm talking about solar farms. And so the state governments have to put up their money up front and the vendors, if I remember correctly, get their money within a set timeline which is typically 45 days, within 45 days of installation. So the payment process has been, you know, completely rationalized and we hear no complaints about the vendors, you know, getting stuck with payments with any of the state governments. Okay, sure. Thank you. Thanks a lot. Thank you. Thank you. As that was the last question for today, I now hand the conference over to the management for closing comments.
Over to you, sir. Yeah, so I'd like to thank the ICICI team and everybody else who joined the call, happy to see a good participation and also individual shareholders joining. We are committed to deliver, you know, the best what we can for the shareholders and we will continue to be very agile and looking at the situation in the market navigate accordingly. So thank you so much, everybody and a good night. Thank you, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.