Answer

• Solar wafers as discussed above is capital intensive, technologically challenging and for some processes labour intensive. Module manufacturing is more automated and continuous process, on the other hand some processes and wafer and cell manufacturing are batch processes and with higher requirement for labour.

• With these reasons, making wafers and cells might not be economically viable in US. A lot of companies have announced plans for cell manufacturing; however, it seems to be running on delays. In wafer manufacturing, a large player Cubic PV has cancelled their 10 GW wafer plant. One needs to keep tracking the upcoming manufacturing capacity in US.

• Based on current regulations and incentives, cell manufacturing is economically viable in US, however going back all the way to polysilicon is currently not viable. Waaree is setting up Module capacity in USA taking advantage of favourable IRA policies and government inclination to cut out Chinese imports. In long run the more backward integrated you are in every major geography better would be the prospects given the fact that most economic blocs are vying for energy security in long run.

Answer

According to our understanding, India and US have the right building blocks in place to backward integrate in polysilicon, however the capacities will come over longer term. Given the capital-intensive nature of production, government support will be a key for this segment.

The Right to win in polysilicon and ingot wafers are as follows:

• Low cost of capital – Both polysilicon and wafer production are highly capital-intensive. According to estimates by the IEA, the capex for polysilicon production in India is approximately $140 million per gigawatt (GW), while in China, costs are 40% lower. Therefore, companies able to secure capital at a lower cost will hold a significant competitive advantage in this sector.

• Low-cost consistent power supply- In China, power accounts for approximately 50% of the cost of polysilicon production. As a result, most Chinese manufacturing facilities are located in provinces like Xinjiang and Inner Mongolia, where access to cheap power is readily available. In India, utilizing a captive distressed thermal power plant in the coal belt could be an ideal solution for reducing production costs. The Adani Group holds a clear advantage in this regard, and Reliance has also explored acquiring distressed coal plants, such as the SKS power plant. In the future, round-the-clock (RTC) renewable energy could serve as an alternative power source for polysilicon production.

• Economies of Scale – As a rule, the production costs for a large-scale polysilicon producer with a capacity of around 10,000 tons can be over 40% lower than those of a small-scale producer with a capacity of 1,000 tons. Larger plants benefit from economies of scale but require significantly more capex, highlighting the importance of raising capital at lower rates. This reinforces the competitive advantage for companies that can secure financing at a lower cost.

• Technology- The modified Siemens process is the predominant method for polysilicon production, while the Czochralski (CZ) process is utilized for ingot manufacturing. Currently, the equipment employed in these processes is largely standardized, and the stringent quality standards leave little room for significant modifications. Given that no Indian players possess the foundational technology required to initiate production, they will need to import standard equipment and collaborate with technology providers to establish manufacturing units. At this juncture, we believe that all players are essentially on equal footing in terms of technology.

• Raw Material- High-quality quartz is available in various states across India, including Andhra Pradesh, Rajasthan, and Gujarat. However, the production process also requires low-ash-content coal, which must be imported. Given the Adani Group’s extensive network of ports, power plants, and cement operations, they possess significant expertise in coal procurement and supply chain management. This capability provides the Adani Group with a distinct advantage over competitors in securing the necessary raw materials for polysilicon production.

Question

• What are the prospects for diversifying the polysilicon supply chain beyond China, considering its environmentally harmful and energy-intensive production? How feasible is it for other countries, like India or the U.S., to build competitive supply chains in this space?

There’s a lot of useful stuff about the geospatial sector (specifically for land records) in this that adds to my initial post. Bit long but quite useful

This one from the 8 min mark shows the importance that the govt. is giving this sector and emphasizes that we have barely begun

India’s Path to Global Leadership in Space & Geospatial Sectors

Everything has been going right with the company… Growth, Capex, WC reduction, Decent ROE, newer brands, Higher penetration in the existing and new states, … Managmennt is dubious but i dont think stock deserves this valuation…

Disc… will sit on sidelines for some MF to come in