Operator: Ladies and gentlemen, good day, and welcome to the Fujiyama Power Systems Q2 FY27 earning conference call, hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the listen-only moat, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Yash from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.
[Analyst] (Motilal Oswal Financial Services Limited): Thank you. On the call today, we have the management team being represented by Mr. Pawan Kumar Garg, Chairman and Joint Managing Director, Mr. Yogesh Dua, CEO and Joint Managing Director, and Mr. Prashant Gupta, CFO. We will begin the call with key thoughts from the management team. Thereafter, we will open the floor for Q&A session. I would now like to request the management to share the perspective on the performance of the company. Thank you, and over to you, sir.
Pawan Kumar Garg: Good afternoon, everyone, and thank you for joining Fujiyama earning call for second quarter and first half of FY 2027. With me today, Mr. Yogesh Dua, our CEO and Joint Managing Director, and Mr. Prashant Gupta, our CFO. I would like to use my time a little bit differently today. The numbers are in the presentation, and Prashant will take you through them. I want to talk about what kind of company Fujiyama is and why we believe this business keeps compounding. I also want to answer few FAQ, the dip in margin this quarter, and increase in inventory. Let us discuss half year in a short. In the first 6 months of FY27, Fujiyama did INR 2,652 crore of revenue. That is practically similar to the INR 2,655 crore we did in whole year of FY26.
Pawan Kumar Garg: EBITDA for the H1 is INR 478 crore, up 129%, and normalized PAT, profit after tax, is INR 296 crore, INR 98 crore, up 128%. In Q2, revenue grew 130% to INR 1,307 crore, and EBITDA grew 116% to INR 223 crore. We can say double the business in a year during this period. We have done that while putting money into plant, people, and reaching for next targets. Let us discuss who we are. Sometimes we are grouped with solar module manufacturers. We are not pure solar module company. Fujiyama is consumer company in household energy. More than 85% of our revenue comes from retail, household, and small businesses who buy from a dealer in their own town.
Pawan Kumar Garg: Fujiyama is listed company in India that is built exclusively around the roof of solar solutions for retail customers, and that also make every core part of system itself, solar cell, solar panel, inverter, and batteries. We do this across all three systems type, on-grid, off-grid, and hybrid. Our range has wide range of SKU in different range from 40-watt panel to 120 kVA online UPS. Why does this matter? A household does not buy panel, it buy outcome, a lower electricity bill or power when grid fails, or both. Each customer has a different requirement. For example, family in Eastern UP need backup above everything else. A family in Gujarat wants to export power to the grid. A shop in Madhya Pradesh want both.
Pawan Kumar Garg: A company that makes all these type of systems can sell each of them the right solution through same dealer with one brand, one warranty, and one service promise. That is our one-stop shop advantage, and it is very hard to copy. The business was built brick by brick. Our roots go back to 1996 when we started with inverter and UPS. We were selling off-grid solar in small towns of India long before current subsidy existed. In last five years alone, we have sold more than 1.4 million inverters, including about 4.5 lakh in FY26. Every one of those home is a relationship for life. It will need batteries, panels, upgrades, and services. Let us discuss five strategic moat that are hard to replace. First moat, distribution and deep retail reach.
Pawan Kumar Garg: We have more than 10,200 channel partners, distributors, dealers, and exclusive retail shops across more than 25 states, union territories. More of these relationships go back 15 to 25 years. We are now going deeper into new states. On the map on page number 18 in our presentation, we are covered in 13 states, growing in five, and running special focus program in four. 14 more states and UTs are still largely in front of us. In this H1, we added more than 100 distributors and more than 1,000 dealers. Odisha and Uttarakhand moved into fully covered category. This expanding network provides unparalleled customer proximity in tier 2 and tier 3 markets, supporting rapid product delivery, installation, after-sales service. Our vision is to expand the number of channel partners in single way. Second moat, service on the roof and R&D feedback loop.
Pawan Kumar Garg: The hardest part of this industry is not making panels. India today has far more module capacity. The hard part is mounting the systems on millions of roofs and keeping them working for 25 years. Fujiyama now has more than 1,000 on-roll service engineers, up from about 650 in March this year. They are our own employees, not outsourced, and they support dealers in person for on-sale and installation. Every complaint they log goes back to our 80 plus R&D engineers. That feedback loop is how we developed products such as our patented rMPPT hybrid inverter technology, as well as combo UPS and online PCUs. Third moat, technology that scales service. UTL AI. Serving millions of households across thousands of small towns is a data problem as much as a field problem.
Pawan Kumar Garg: Our board member, Mr. Sunil Kumar, an IIT Delhi alumni with more than 24 years in software development, including at Google, has guided our in-house team in building UTL AI. It is one platform that runs our sales, service, and dealer network through WhatsApp and voice chatbot, operating 24/7 in local languages. An intelligent service bot registers and resolves complaints around the clock. The platform also predicts which spare part each region will need, guides our service engineers to visit our dealers along with their routes, and uses data to pick up the next district or dealer to add. All of it is built in-house. In simple terms, it lets us grow sale and service quality without additional cost growing at the same pace. Fourth moat, backward integration, regulatory compliance, and data security.
Pawan Kumar Garg: Today, we have manufacturing capacity of 1 gigawatt of solar cell, 3.5 gigawatts of solar panel, 4 gigawatts of power electronics, 545 megawatt hour of lithium-ion batteries. Inside our inverter, we make sheet metal cabinet, heat sink, wiring harness, transformers, and coils. We do our own PCB assembly, meaning EMS in-house. Inside our lithium-ion battery, we make our own BMS cards, communication boards, and busbars. In the first quarter, we raised our stake in Zayo Energy and Zayo Cables to 50%. In the next financial year, these companies have a plan to make frame, ribbon, junction box, and cable, and EVA sheet for solar module. This extensive backward integration insulates us from import price volatility, protects gross margin, and builds a cost moat. Furthermore, regulation is moving heavily in our favor.
Pawan Kumar Garg: Since August 2026, MNRE has required inverter suppliers under PM Surya Ghar to keep their app servers and data strictly in India, alongside mandatory M2M SIM data loggers. The Central Electricity Authority new cybersecurity regulations, July 2026, pushed the whole sector in single way. We have confirmed our full compliance to MNRE. Our dongles, data loggers, and monitoring system are made in India, and our data sits in India, Indian servers. As new regulations restrict unvetted foreign hardware and cloud platform, our compliant domestic platform become a key competitive moat. Fifth moat, brand equity and dual brand strategy. We deploy a powerful dual brand strategy. Surya Kumar Yadav represents Fujiyama Solar and Anil Kapoor represents UTL Solar. UTL carries close to three decades of trust in tier 2, tier 3 India. Our panels carry 25 years performance warranty, and our on-grid inverters carry up to 10 years product warranty.
Pawan Kumar Garg: In a category where customer is buying promise that last decade, brand equity and warranty trust are core drivers of pricing power. Let us discuss capacity. What is coming next and why it adds to margin? In August, we commissioned 2 GW of power electronics facility at Ratlam. Ratlam now runs both solar panel, which started in May, and power electronics. Three more additions are coming. Lithium-ion battery at Ratlam. We have upsized our facility from 2 GWh to 3 GWh and expect it come online in coming quarter. That will take our lithium-ion capacity to 3.5 GWh. Tubular batteries at Hardoi, Uttar Pradesh. A new 1 GW plant that replaces Bawal capacity lost in May fire is expected to be commissioned in coming quarter. TOPCon solar cell at Ratlam. 1.2 GW is on track for Q1 FY28. It will take our cell capacity to 2.2 GW.
Pawan Kumar Garg: We are pushing hard for an earlier launch. Adding TOPCon cells with existing PERC cell manufacturing will significantly enhance our efficiency and competitiveness to DCR market. The important point is each of these plants replaces something we buy from outside today or tomorrow. Since the Bawal fire, we have been buying tubular batteries from outside suppliers, and we buy every cell for every panel beyond our 1 GW capacity. Our lithium-ion requirement also exceeding our current in-house capacity. The demand for these products already exist in our own sales, so this new capacity adds to margin from its first unit. It does not have to find new customers. It replaces external purchases. Beyond this, we are evaluating ingot wafers ahead of ALMM List-III, which starts in June 2028, as well as sodium-ion or any other advanced chemistry battery.
Pawan Kumar Garg: We are also gaining experience in battery energy storage through 5 MW pilot at Dadri and planned 10 MW installation at Ratlam. Concern, margin, and inventory. Now, let me take the two FAQ post our results and answer them directly. On margin, our EBITDA margin was 17.1% in Q2 against 18.9% in Q1. Though our gross margin is similar in both the quarter-on-quarter decline is mainly from seasonal softness, which is normal in rooftop solar industry, as absorption of operating fixed cost continues in quarter. Additionally, overhead rose because we staffed and ran the Ratlam facility before its full volume arrived. That is the cost of building ahead of demand. These overheads are largely fixed, so as Ratlam fills up, they get spread over much larger revenue base. Selling and distribution overheads also increased. Two more items are temporary. The first is Bawal fire.
Pawan Kumar Garg: Until Hardoi starts, we buy tubular batteries from outside, which means lower margin. The second is deliberate front-loaded expansion in our sales, marketing, and service footprint across new states, reflecting the company's investment in brand visibility, including targeted campaigns, especially tier 2 and tier 3 cities and rural market. Because of war situation, inflation was on a higher side, which is normalizing now. On half-year basis, our EBITDA margin was similar to last year. On inventory side, inventory rose to INR 1,230 crore in September from INR 910 crore in March, but the business had doubled in the same period. As mentioned on page number 6 of our presentation, when measured against COGS, inventory days actually fell from 123 days to 99 days. If we will see in respect to sales, it will be less number of days. Overall net working capital days fell from 83 to 59.
Pawan Kumar Garg: Receivable days are just 10. So we are not pushing the stock into channel on credit. We keep the stock ready in our warehouse and dispatch fast to our channel partner. The buildup normal and sometimes deliberate as explained below. Normally, inventory days range as one and a half month raw material, 15 days as semi-finished goods, and one month as FG. The second point, the domestic cell switch on 1 January 2027. From the date, every net meter rooftop system in India, subsidies or not, must use panel made with domestic cell listed under ALMM List-II. Cells are very important. As June 2026, country has about 35 plus gigawatt of cell capacity against 200 gigawatt of module capacity. We own our cell and we are positioned DCR panel and complete system ahead of this switch. New products from Ratlam.
Pawan Kumar Garg: When we add new product lines, raw material adds for initial time, which takes some time to be normalized. Let us discuss PM Surya Ghar and demand beyond subsidy. PM Surya Ghar Muft Bijli Yojana has been remarkable program according to national portal. It has covered more than 60 lakh households, installed more than 19 gigawatt, and released over INR 36,000 crore of subsidy as on 31 October 2026. About 5 lakh households remain to be covered in this current phase, which runs until March 2027. The next phase, PM Surya Ghar 2.0, is under government's consideration. Reported proposals include support of battery storage, incentive linked actual generation, and shared rooftop solar. If storage support comes, it plays directly to a company that makes the panel, the hybrid inverter, and battery under one roof. But let me very clear, our business does not depend totally on subsidy.
Pawan Kumar Garg: We built our off-grid business over decades without one, and economics now stands on their own. Electricity bill keep rising. Several states, including Madhya Pradesh, Jharkhand, Chhattisgarh, have raised the tariffs for FY27. Household consumption keeps growing with air conditioner and appliances. In many tier 2, tier 3 towns, supply is still unreliable, so backup is necessary, not a luxury. On-grid solar cannot keep lights on during the power cut. A solar system with a battery can do this. Government data shows that more than 20 lakh households under PM Surya Ghar now report zero electricity bill. That kind of word of mouth sells the next system with or without subsidy. The runway is very long. India rooftop solar capacity has grown from about 12 gigawatt in March 2024 to about 26 gigawatt in March 2026. Against an estimated rooftop potential of 67 gigawatt, that is less than 5% penetration.
Pawan Kumar Garg: Worldwide data show that there is huge potential in India for rooftop solar, as distributed solar is double the efficiency than ground mount solar and distribution losses. Let us discuss on solar overcapacity. About overcapacity in India solar, it seems real, but it is in modules that hurts companies that sell modules as a commodity to project developers. Our panels go into our own captive system and are sold through our own channel. So the module price is not what drives our economics. The complete system and service behind it are. Within the solar chain, the important part is cell, and we own them. Also important is trusted brand with distributor in every district and an engineer who reaches to the roof. And we have spent close to three decades in building it. When an industry consolidates, market share moves to the companies with brand reach and service.
Pawan Kumar Garg: We intend to be one of them. Outlook. Supported by our expanding distribution, newly commissioned capacities at Ratlam, and upcoming battery plants, we remain fully confident of achieving our robust growth targets while maintaining our margin discipline. Thank you. I will now hand over to Prashant for financials, after which we will be happy to take your questions. Thank you.
Prashant Gupta: Thank you, Pawanji, and good afternoon, everyone. I will cover the quarter and the half year, then explain the margin and working capital movement, and close with the balance sheet. All figures are standalone and in INR, rounded off to the nearest crore. When compared to Q2 FY26, the company has delivered strong growth in Q2 FY27. Revenue from operations was INR 1,307 crore, up by 130%, and EBITDA was INR 223 crore, up by 116%. Hence, revenue and EBITDA both are more than double compared to Q2 FY26. This was driven by significantly higher sales volume, supported by our pan-India network of on-roll service engineers and a conscious strategy of passing on cost benefits to the customers through competitive pricing to expand market share.
Prashant Gupta: The Q2 FY27 results also absorbed overheads at the Ratlam facility, incurred ahead of the production ramp-up of our recently commissioned panel and inverter division, which contributed to the moderation in EBITDA margin to 17.1% from 18.1% of Q2 FY26. Profit after tax was also doubled to INR 133 crore, up by 111% at a margin of 10.2% compared to 11.1% in the corresponding period last year. The movement in PAT margin was largely in line with the moderation in EBITDA margin. Moving on to the half year, revenue for the half year was INR 2,652 crore, up by 127%. EBITDA was INR 478 crore, up by 128%, and the EBITDA margin was 18% compared with 17.9% in H1 of FY26. Reported PAT was INR 191 crore.
Prashant Gupta: This includes the exceptional loss of INR 143 crore before tax or INR 107 crore after tax from the Bawal fire, which we recognized in the full in Q1. Excluding it, normalized PAT was INR 298 crore, up by 128% at a margin of 11.2%. The insurance claim has been filed for the full carrying value of the damaged assets. Salvage disposal has already done. We expect resolution and realization of the insurance claim in this financial year, which will provide additional working capital cash inflow. Moving on to the working capital. Net working capital days improved to 59 days in H1 FY27 from 83 days in FY26 on an annualized basis. Receivable days come down to 10 from 15 and inventory days to 99 from 123, while payable days was 50 against 55. In absolute terms, inventory rose by about INR 320 crore to INR 1,230 crore.
Prashant Gupta: As Pawanji explained, that is positioning for the H2 and for the domestic cell transition. In the H1, operating cash flows before working capital changes was about INR 490 crore, which shows the earnings are converting to cash. We invested about INR 661 crore in working capital to support a business that has been doubled in size and spent about INR 184 crore on investing activities. Moving on to the balance sheet. As of 30 September 2026, total assets increased to INR 2,907 crore from INR 2,344 crore as of March 2026. Total equity increased to INR 1,466 crore from INR 1,273 crore. Total debt was INR 851 crore, while cash and cash equivalent stood at INR 52 crore, resulting in net debt of INR 800 crore, with net debt to equity ratio of 0.55 times.
Prashant Gupta: The increase in the net debt is to finance working capital and capital expenditure in Ratlam. With respect to return ratios, we want to clarify that in slide 23 of our earning presentation, ratios are half-year non-annualized figures. Current half-year's bar are shorter than last year. On an annualized basis, our return ratios will be better when they will be presented annually. Going forward, our focus will remain on operational discipline, optimizing working capital, ramping up Ratlam, and sustaining robust profitable growth. Thank you. Thank you, everyone. We are now open for your questions.
Operator: Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to please use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue settles. A reminder to all, you may press star and 1 to ask a question. We have the first question from the line of Prithviraj from Unifi Capital. Please go ahead.
Prithvi Raj: Yeah, hi. Thanks for the detailed introduction. I just have a couple of questions. One, you had a very strong H1 revenue growth of almost 125%. How should we look at H2, given that only 66 lakh households have benefited versus 1 crore target? Should we expect similar 100% revenue growth in H2, or should we see H2 to be lower or higher?
Pawan Kumar Garg: Hi, this is Pavan. Can you repeat once more this question?
Prithvi Raj: On the revenue growth, how should we look at H2 of this year? Should we expect similar like H1 wherein you will double your revenue on YOY basis, or can it be higher or lower?
Pawan Kumar Garg: This question is very difficult basically, because we have given some guidance and we want to revise the guidance after Q3 results. Basically, I want to skip this question, sir. Sorry, first question I am skipping because this will meant something guidance again, basically.
Prashant Gupta: Just to add on what Pawanji is saying that lot of variable factors are prevailing in the market. Since ALMM 2 is also on the door, with this ALMM 2, the market might further shift to the DCR cells and since the shortage is still continuing on the DCR cell side. PM Surya Ghar 2.0 is also under the discussion, and it is be very important to see that how government and by when government will give a clarity on that as well. That is why Pawanji wants to wait for another quarter, and we will cover the guidance for Q4 once we will declare the results for Q3.
Prashant Gupta: Because we believe in the coming quarter, some clarity will further come on PM Surya Ghar 2.0 and the deferment, it is still there on the chart on the MNRE list about the implementation of ALMM 2. Hope this clarifies, Akira.
Prithvi Raj: Okay. Let me put it in other way. Your revenue guidance for the full year has been, I think, 70%. H1 alone, you have done a very high number. Would the full year revenue growth be higher than the guidance, or how shall we look at it?
Pawan Kumar Garg: We will review it, sir, during the Q3 results, basically. We have taken the stand, basically, that we will not revise the guidance this time, sir.
Prithvi Raj: Okay. Fine. Moving on to your margins, given the backward integration that you have been doing across various categories, how should we look at margins? Will it be around 18% to 20%, or will it be 15% to 17%? How should we look at overall EBITDA margins?
Pawan Kumar Garg: It will be sustainable, sir, basically.
Prithvi Raj: Okay.
Pawan Kumar Garg: It will be sustainable, as per our last guidance, basically.
Prithvi Raj: Oh, which is 18% to 19%. Got it. Finally, on this news that Chinese government is looking to ban technology transfer with respect to solar, how are we positioned with the new cells plant? Will there be any issue with respect to execution there?
Pawan Kumar Garg: Machines already received, and we don't see any challenge, basically.
Prithvi Raj: Okay. Thank you, sir. That is all from my side.
Pawan Kumar Garg: Thank you, sir. Thank you.
Operator: Thank you. We have the next question from the line of Himanshu Bisani from PinPoint X Capital. Please go ahead.
Himanshu Bisani: Hi, sir. Thanks for the opportunity, and congratulations on a great set of performance. Sir, our peers, solar cell manufacturers report a margin of north of 30% on EBITDA, and our margin is close to 17% to 19%. Is it just because that our other components of the kit, your batteries and inverters, are a lower margin business, or is it because that we are still yet to completely integrate our captive consumption? Just want to understand how should we think about the EBITDA margins as cell integration ramps up. Also considering the fact that as supply has increased, the cell prices have gone down. So, how should we think about it?
Prashant Gupta: Definitely, we will try to maintain the margins that we are having currently now. First answering to the first question that you asked. 30% generally are not there uniformly in all the solar panel manufacturers. The biggest differentiator between us and the rest of the players are that the sudden rise in margin for the players who are having competitive advantages in the form of DCR solar cells might be temporary, and it has been seen in this quarter as well that for the other B2B players, there is a slight dip in the margins that we have seen. Whereas in our case, we are strongly positioned that as the first thing that we are into B2C space, where the margin increase will not be sudden and high.
Prashant Gupta: That is why in B2C, it is comparatively more easy to sustain the margin than a pure B2B player, which is more dependent on any government policy or a sudden spike in the demand. We have built this model in the last 30 years so that the revenue growth is also sustainable and whereas margin growth is also sustainable. Coming to the margin profile mix, definitely in our kitty, we have more than one product of pure solar panel. In solar panels, there are DCR and non-DCR. In batteries, we have lithium and tubular. In inverter, we have all three kinds of inverter, be it off-grid, on-grid, and hybrid.
Prashant Gupta: Your second point is correct that we have a margin profile of consumer-based products, and that is why we are able to give a consistent margin compared to the last half year that we have given in this year of 18%.
Himanshu Bisani: Sir, when you say that it is a B2C and more sustainable margin front, as the integration from the new TOPCon facility, naturally our margin should increase, right? Is that the understanding?
Prashant Gupta: See, we do not want to be aggressive on that side. As I said that some part of our business is also linked to the government policies in form of implementation of ALMM 2. So, right now, the condition is that this DCR cell shortage is still there because the current run rate of DCR solar cell production is only 2 gigawatt if you compare to the last month, 2.2 to be precise in the last month. Whereas the demand is much higher than that. That is why if this ALMM 2 comes up from 1 January, then again, we believe that this prices of DCR solar cell might further go. Having said that, if it defers, then definitely a different story can come up because of shortages of DCR solar cell currently.
Prashant Gupta: Apart from that, as I mentioned in the previous answer, PM Surya Ghar 2.0 is also still yet to be clarified from the government front. That is why raw material prices are also included, geopolitical things are also there leading to the increase in fuel prices. That is why though we have advantages of currently 1 gigawatt monocell line, we have announced additional 1.2 gigawatt TOPCon solar cell line. But we want to be on a conservative side, that is why we do not give any aggressive guidance to it because the variability is much high in terms of raw material pricing and government policies and the shifting of the market demand.
Himanshu Bisani: Understood, sir. Sir, continuing on the government policy, PM Surya Ghar 2.0 with something of the BESS was mentioned in the previous call. I know you said that there is yet clarity to come from the government, but what kind of opportunity we are looking at? What is expected? Is it much bigger because of the opportunity size in the market?
Pawan Kumar Garg: Sir, this battery-based system we are doing from last 30 years. So, it is our business model basically. If this policy comes, it directly suits us basically, because we are doing this business from long time and we think we will get more better share in the market basically.
Himanshu Bisani: Okay. Lastly, sir, as there are a lot of solar companies which are seeing that the rooftop market is growing so fast and are planning to enter it and also the larger module manufacturers are coming up with their own inverters and kits, what kind of competitive intensity you see in the industry and how are we placed into benefit from it?
Pawan Kumar Garg: तो retail में, जैसा कि आप देख रहे हैं कि इसमें जब expenses की बारी आती है, जब retail में जाते हैं लोग और वहां पर retail के जो channel पूरा develop करना है, जो service engineers appoint करने हैं, जो sales के person हैं, तो एक-दो quarter जब वो करेंगे तो उसके बाद ही वो actual में हम find out कर सकते हैं कि वो कितना sustain करेंगे उस चीज को और क्या उनका इसमें decision होगा। अगर वो उस business को अलग से उसका profit and loss निकालेंगे, उसके बाद क्या decision होगा, तो वो उसके बाद ही कह सकते हैं कि कोई कितना लंबा रुकेगा इसमें। क्योंकि inverter भी जब हम करते थे तो काफी companies आई थीं, जैसे Videocon भी आई थी, Philips भी आई थी और काफी companies ऐसी आई थीं जिन्होंने इस retail में काम करने की कोशिश की थी। पर काफी लंबे time तक वो sustain नहीं किया था उन्होंने।
Himanshu Bisani: Got it, sir. Thank you. Thank you so much and all the best.
Operator: Thank you. We have the next question from the line of Shweta from iThought PMS. Please go ahead.
Shwetha Sairam: Hi, sir. Good afternoon. My first question is basically out of the DCR panels that we sold in H1, how many of those use our own cell versus bought-in cell?
Prashant Gupta: For mono, we have the in-house capacity, but there is a good demand for the TOPCon as well. Just to give you a rough estimate, you can say around 70% to 80% is in-house and 20% to 30% that we have sold DCR is from outside.
Shwetha Sairam: Got it, sir. My next question is roughly what percentage of our H1 revenue came from the PM subsidy customers?
Prashant Gupta: Right now, more than 50% of our revenue is coming from this on-grid and DCR-based market.
Shwetha Sairam: Okay. So, 50% is from the subsidy customers. Is that the rough split?
Prashant Gupta: Yes.
Shwetha Sairam: Got it, sir. Thank you so much.
Operator: Thank you. We have the next question from the line of Sagar Shah from Spark Capital. Please go ahead.
Sagar Shah: Yeah, good afternoon, management. और first of all, happy Diwali and happy new year to the entire management of Fujiyama Power Systems. प्रशांत जी and पवन जी, actually मेरा पहला question यही था आपसे कि in regards to this oversupply that you referred to, जो आपने opening speech में कहा था, in regards to the oversupply जो next year होने वाला है, because we have a capacity or industry capacity of 210 GW, whereas the demand is anything around 40 to 45 MW on the higher side. So, उसके वजह से means how much you can say the correction होने वाला है module prices में?
Sagar Shah: Because हम लोग अगर हमारा खुद का capacity भी देखें, when we take our capacity actually into consideration, तो we also have something like a 3.5 GW of panels, and I am talking of FY27 के हिसाब से, FY27-28 के हिसाब से. और whereas हमारा जो in-house cell capacity है, वह भी 2.2 GW है, Ratlam और Dadri को मिलाकर. So, कितना realization में correction होगा आपके हिसाब से? That is my first question, sir.
Pawan Kumar Garg: जी। तो sir, अगर हम देखेंगे तो non-DCR का तो अभी भी market खराब ही चल रहा है और इससे ज्यादा खराब होने की संभावना और दिखती भी नहीं है। जहां तक DCR की बात है कि अगर सारा का सारा DCR use होता है, तो अगर ALMM 2 जो है, यह list शुरू हो जाती है, जो कि अभी तक के indications तो यह हैं कि January से 100% शुरू होगी ही होगी। तो उतना cell अभी नहीं बन पा रहा है जितना कि requirement है। तो वहां पर shortage रहेगी cell की। और जहां तक capacities की बात है sir, अगर हमारा 3.5 gigawatt अगर हमारा panel में है और 2.2, तो 100% तो बना भी नहीं पाता कोई। Cell में highest 85 to 90% आ रहा है और panel में अगर हम देखेंगे तो वह around 70% के आसपास रहता है। तो अगर उस तरह से देखेंगे तो हमारा तो अपना जो captive consumption है, तो उसके हिसाब से over capacity नहीं है अभी हमारे पास। बल्कि हो सकता है हमें next year कुछ बाहर से ही लेना पड़े।
Sagar Shah: Got your point. Sir, second question was related to other expenses के regarding actually. क्योंकि आपके gross margins तो काफी stable थे. मैं quarterly result के बारे में बात कर रहा हूं. H1 तो काफी stable था as compared to H1 last year के हिसाब से. मगर यह quarter में other expenses जो आपका INR 112 crores रहा है, that is much on the higher side. अगर आप year-on-year भी compare करें तो वह double से भी ज्यादा है. तो उसका reason क्या है sir? Because उसकी वजह से आपके margins टूटे हैं. वह जो 17.1% margin आया यह quarter में, वह उसके वजह से ही आया है. तो उसका reason क्या था? Can you please specify?
Prashant Gupta: So basically आप देखेंगे ना, absolute term में तो देखिए अगर revenue double हुआ है तो definitely खर्चे double होंगे. How we see it? We see it as a percentage of revenue. तो उसमें जो आपको दिख रहा है, तो basically उसके दो-तीन broad reason हैं. पहला है कि हमारा Ratlam के लिए जो fixed overheads हैं, हमारे inverter अभी recently ही capitalized हुआ था, August में commission हुआ था. तो उससे increased overheads हैं. Apart from that, अभी थोड़ा सा जो selling distribution से overhead है, वह बड़े हैं and that's a conscious call because we want to target tier 2 and tier 3 cities. तो वहां पर हमने कुछ one-off campaigns run किए हैं ad placement के. आप अगर feedback भी लेंगे market से, you will see कि हमारी brand visibility काफी बढ़ी है even in tier 2, tier 3 cities and the villages.
Prashant Gupta: तो यह is an investment for us to increase our brand visibility for the coming quarters. Similarly थोड़ा सा freight भी बढ़ा है because you know because of this geopolitical crisis, petrol-diesel के rates में थोड़ा increase आया है if you compare it with the last year in Q1 itself. So these are the few two-three reasons जिसकी वजह से आपको
Pawan Kumar Garg: और sir, जो guidance next year की है, उसके लिए भी तो तैयारी कुछ करके चलते हैं। तो वह भी थोड़ा सा infrastructure अपना service infrastructure, आप देखेंगे number of service engineers भी हमने बढ़ाई है और बाकी भी infrastructure थोड़ा सा हम future की तैयारी करके चल रहे हैं। तो वह investment है future के लिए कहीं ना कहीं।
Sagar Shah: Okay, got your point sir. So third question sir, जो आपने expansion के बारे में तो follow up on that existing question. जो expansion जो हमने investment कर रहे हैं, वह south में है क्योंकि हम लोग south बहुत aggressively plan कर रहे हैं next year के लिए. तो south में अभी आपका expansion में क्या status है? आपने वहां पर shops establish किए हैं, dealers establish किए हैं. कैसा रहा है south में expansion और आपका experience as a market?
Yogesh Dua: South में sir, जो पाँच states हैं, उसमें Kerala solar में already अच्छा है और वह अच्छा कर रहा है और Tamil Nadu में भी हमने पहले से काफी better किया है। तो दो states अच्छे हैं, Andhra और Telangana में हम अभी कोशिश कर रहे हैं कि इसको आगे बढ़ाया जाए और उम्मीद करते हैं कि next quarter में better रहेगा। तो यह चल रहे हैं efforts और results भी दे रहे हैं sir.
Sagar Shah: तो South में कितना revenue sir, South से आया है? Out of the INR 1,307 crores जो हमने clock किया है इस quarter में, उसमें से South का कितना revenue है sir?
Pawan Kumar Garg: इसमें sir, जो आपका question MP को लेकर था, MP से हम Maharashtra भी cover कर रहे हैं। Maharashtra भी हमने काफी gain किया है sir अभी recently। अगर Maharashtra में भी sale, Gujarat, Maharashtra हम MP से ही cover कर रहे हैं और Chhattisgarh भी हम MP से cover कर रहे हैं। तो यहाँ पर भी हमारा sale volumes बढ़े हैं और South में भी बढ़े हैं। इसका sir calculate एक बार देखना पड़ेगा। Immediately अगर हम बताएंगे, थोड़ा सा figures हमने निकाले नहीं हैं immediately.
Sagar Shah: Okay.
Pawan Kumar Garg: तो next call में हम इसको ले लेंगे या फिर इसको और कैसे दे सकते हैं हम इसका response?
Sagar Shah: हाँ, नहीं, कोई बात नहीं sir, कोई बात नहीं। I will take it offline. My last question was related to cash flow sir. हमारा cash flow इस quarter में भी negative रहा था, इन six months में, और क्योंकि inventory बहुत higher side की आपने reasons भी दिया। Ratlam का expansion और Maharashtra में भी expansion कर रहे हैं आप। और उसकी वजह से हमारा debt भी काफी बढ़ रहा है, sir.
Sagar Shah: So, any plans on कि कैसे debt को reduce किया जाए, cash को increase किया जाए, थोड़ा inventory को rationalize किया जाए demand के हिसाब से क्योंकि inventories हमारा cash भी burn कर रहे हैं और debt भी बढ़ रहा है, balance sheet में थोड़ा heavy भी हो रहा है. So, related to that और एक suggestion भी था मेरा कि one suggestion was कि आप थोड़ा breakup दे सकें next quarter से कि आपका panels, sales, power electronics से individual revenue कितना आ रहा है. आप investor presentation में दे सकें तो investors को clarity अच्छा रहेगा, sir. कि आप as a company Fujiyama कैसे diversify हो रहा है. It's not just a pure solar producer, but it's an integrated company actually with all solar solutions actually, not a solar products. मेरा suggestion था, sir.
Pawan Kumar Garg: ठीक है, एक slide add करेंगे हम कि इसको bifurcate में क्या-क्या issues आएंगे, basically देने लगेंगे। शुरू में दे रहे थे तो उसके काफी issues बन रहे थे। वह हम एक slide add कर देंगे next time से कि उसके क्या complications आते हैं।
Sagar Shah: Okay, और related to debt, sir?
Pawan Kumar Garg: Debt cover.
Prashant Gupta: So, debt में the increase in debt is close to INR 100 crore is for the Ratlam expansion, जो हम Capex वहाँ पर incur कर रहे हैं. Rest as you have rightly pointed out कि हमारा थोड़ा inventory बढ़ा है because हमारा revenue भी double हुआ है उसके हिसाब से. So, accordingly the inventory has increased. So, INR 300 crore के आसपास उसमें है.
Sagar Shah: तो उसको कैसे rationalize करेंगे, sir?
Prashant Gupta: Sir, अभी देखिए हमारी inventory के ऊपर, we are working कि what are the ways we can optimize it. Apart from that, अभी Bawal का जो INR 80 crore का हमारा inventory था, almost जो वहाँ पर damage हुआ, उसका भी कहीं ना कहीं impact है which is contributing to this. तो जैसे ही हमारा Q4 में अगर जितना हमने INR 140 crore plus का loss recognize किया था, if it comes जो हमें expected है कि financial year में आ जाएगा, it will also help us in the cash on the cash front. On the debt side, I think as market is already aware that we are taking a resolution on the QIP side. तो अगर यह जैसे ही board से approve हो जाता है, maybe we can also plan for the debt repayment from that.
Sagar Shah: Okay, fine sir. Thank you so much and all the best. I will take it offline about the south numbers and Happy Diwali to the entire team.
Pawan Kumar Garg: Thank you sir. Thank you.
Operator: Thank you. A reminder to all the participants, you may press star and 1 to ask a question. Ladies and gentlemen, that was the last question and with that we conclude the question and answer session. I now hand the conference back to the management for the closing comments. Thank you and over to you, sir.
Pawan Kumar Garg: Thank you. Thank you once again for joining us today and for your continued interest in Fujiyama. We appreciate your confidence you place in our company. If you have any additional questions, please feel free to reach us or our investor relationship advisors, Churchgate Partners, and we will be glad to assist you. Thank you very much for the time and support. Thank you. Thank you very much.
Operator: Thank you members of the management. On behalf of Motilal Oswal Financial Services Limited, we conclude this conference. Thank you everyone for joining with us today and you may now disconnect your lines. Thank you.
