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Borosil Renewables Ltd
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Ladies and gentlemen, good day, and welcome to Borosil Renewables Q4 FY '23 Earnings Conference Call hosted by Axis Capital Limited.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jiten Rushi from Axis Capital. Thank you, and over to you, sir.
Thank you, Tanvi. On behalf of Axis Capital, I am pleased to welcome everyone to the Borosil Renewables Q4 and FY '23 Earnings Conference Call. We have with us the management team of arose Renewables represented by Mr. P.K. Executive Chairman; Mr. Ashok Jain, Wholetime Director; Mr. Anand Sultania, Chief Financial Officer; and Mr. Sopiva, Head of Market.
We will begin with the opening remarks from the management followed by a Q&A session. Thank you, and over to you, sir.
Good afternoon, and welcome to the Borosil Renewables FY '23 Investor Call. The Board of Borosil Renewables on 25th May approved the company's financial results for the year financial year and quarter 4 of the financial year '23.
Our results and an updated presentation have been sent to the stock exchanges and have also been uploaded on the company's website. We will discuss the operation of Borosil Renewables on a stand-alone basis as well as on a consolidated basis. I will also provide you some highlights of the operations in our newly formed acquired overseas subsidiaries.
During financial year, the company recorded a net revenue from operations of INR [ 6.17 ] crores, an increase of 6.8% over financial year '22. I Sales volumes on a quantitative basis grew by 4.3% as a result of commissioning of new plant, i.e. SG3 from February 2023. Average selling prices during the year for about 136.5 per millimeter as compared to INR 133.5 per millimeter in financial year '22, an increase of 2.3%. And Export sales during financial year '23, including 2 customers in SEZ were INR 195.25 crores, comprising 28.4% of the turnover, an increase of 14.2% over financial year '22 when it had been INR 171 crores.
While direct exports were INR 11.7 crores, which were up from 127,000 in financial year '22. During the last quarter of financial year 2020, the company recorded a net sales of INR 187.5 crores and from a quantitative standpoint, sales volumes were 7.8% higher than those for quarter 4 financial year '22. However, the average expectory selling price was lower by about 1.4%. The domestic selling prices were depressed for most of the second half of the year as a result of dumping from Vietnam.
The landed cost of imports became lower due to a combination of 2 factors. Firstly, the expiry in August 2022 of preempting duty on solar glass imports from China, imposed in August 2017, coupled with a significant drop in international freight rates. Meanwhile, the price of natural gas, soda ash, packing materials and other commodities, had risen considerably. All these factors contributed to a contraction in margins. EBITDA during financial year '23, including subsidies of INR [ 9.75 ] crores from the government of Gujjar, was 176.55 crores, corresponding to an EBITDA margin of 25.7% and which was a steep decline as compared to an EBITDA margin of 41.1% in financial year '22.
During quarter 4 of financial year '23, the EBITDA was at INR 38.22 crores and the margin was 20.3% as against 34.9% in the corresponding quarter and financial year '22. And 26.7% in quarter 3 financial year '23. Arising from increased costs, coupled with lower selling prices, which prevailed during this period. Moreover, during this quarter, SGC had been lit up and fully manned. As such, our expenses are being incurred while there was little corresponding revenue. Lower EBITDA led to a decline in the profit after tax and the company recorded a profit after tax of INR 80.54 crores a decrease of 47% over financial year '22.
PAT during quarter 4 financial year INR 23 was INR 11.69 crores, which is a decline of 75% as compared to quarter 4 financially attributed to, which had better sales prices. Ironically, solar glass is the only component in the entire solar photovoltaic value chain which has no import duties whatsoever. With the expiry of anticamping duty and imports of Suralason China, post [ 1702 ] imports continue to remain completely exempt from payment of any sort of import duty. While imports are subject to a basic levy of customs duty of 15% as -- so going back to 1999, exempt imports of solar components from payment of customs duty.
This is an anachronism not only because solar glass manufacturing is the most capital-intensive component after solar cells, having the lowest asset turnover is, but also because an investigation launched with the Ministry of Commerce, as recently as 2022 has found the largest solar glass manufacturers guilty of unfair trade practices, that is to say dumping and have recommended imposition of 63% antidumping duty on imports from them. The order seriously skewed against the solar glass industry, where imports of heavily subsidized Chinese glass are welcomed into India with no imposition of any duties.
There is no level playing field for this industry. We have been representing our case to the government previously to end fourth with the exemption from BCB on imports of solar glass. The solar installations in FY '23 stood at a slightly lower 12.8 gigawatts in FY '23 against [ 13.9 ] gigawatts in FY '22. However, overall domestic demand for solar glass has become stronger as demand for Indian-made modules has risen strongly the export markets like U.S.A. whether with strong demand in India.
The additional demand for glass is being met through higher imports going to limited availability of domestic manufacturing capacity and hence, the market share of Borosil Renewables innovative market currently stood at 19% only in the last quarter of the last of last year. The overall demand situation for solar glass continues to look robust in India as the domestic module manufacturing care capacities are expected to rise to almost 100 gigawatts in the next 2 or 3 years from about 35 gigawatts currently. The actual domestic manufacturing may rise to 35, 40 gigawatts annually, which will increase the demand to 3x from the present levels over the next 2 to 3 years.
Commissioning of a 10-megawatt captive power plant of solar plus wind energy being set up through an SPV in which Borosil has 31% shareholding, which was planned in December '22 was delayed due to they'll pay in approvals from the relevant state authority. I'm happy to share with you that their acquisite approvals have now been obtained and the project is commissioned. This is expected to meet about 35% of the company's power demand. This has enabled us to increase the use of green power and manufacturing while also reducing the average cost of power. We are also looking to set up an additional 8 megawatts of solar placement power was there is enough clarity on the regulations. I'm happy to share that commercial production from our third furnace G3, began from 23rd February 2023. And taking the production capacity to 1,000 tonnes per day, 6 gigawatts from 450 tonnes per day, 2.8 gigawatts.
Going forward, we shall now be in a position to more than double the sales, servicing our higher customer demand while achieving higher operating leverages. The demand for glass has shifted to higher sizes where we now have achieved capability. About 55% to 60% of our production is already in large sizes. We have recently commissioned facilities to service a higher volume of 2 MM bag glass with holes drilled and also grid printed. These are used for used for a bad glass in bifacial solar PV modules and has become a major growth area.
The recently acquired German solar glass manufacturing plant had added an operating capacity of 300 tonnes per day to BRL manufacturing capacity. The plant has been operating at about 95% capacity However, a cold repair of this furnace was carried out from 13th March to [ 5th ] May and the furnace has been drawn back into production from May with a higher capacity of 350 tonnes after incorporating changes, which will help raise the production yield and achieve energy savings. A portion of the CapEx planned for the processing area is still under implementation, which will help achieve capability to supply larger-sized glasses and also enable more efficient operations.
And overall CapEx of EUR 34 million will be incurred on this, of which EUR 24 million is being borrowed from banks. Now I come to the consolidated results for the quarter, which is the first full quarter post acquisition. These results include the operations of the wholly owned subsidiaries abroad. The Interfor Group registered a revenue of INR 121.79 crores. In this quarter, with an EBITDA of INR 5.2 crores in registering an EBITDA margin of 4.2%. The subsidiaries have been able to achieve this despite prohibitively low, privately high energy and raw material prices and also a shutdown of production from 13 March 2023.
The consolidated net revenue and EBITDA for the quarter 4 financial year '23 stands at INR 39.5 crores at INR 39.7 crores, respectively. Energy prices have been correcting gradually. However, on the other hand, the sales prices have been adjusted downwards in order to maintain competitiveness with the imports. With an emphasis on domestic manufacturing and sourcing from second force and European Union, U.S. and Turkey, we see export demand from our Indian operations rising significantly over the next 2 to 3 years. We believe that with benefiting operations in Europe and in India, where in a strategically advantageous position to meet higher demand in the export markets.
With that, I would now like to open the floor to questions that you may have.
We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Kabel Sahar from DSP Investments.
Sir, first question is that since we have 1,000 TPD of capacity right now and we can cater to 6 gigawatt of solar module capacity? And India in the next 2 to 3 years will have 100-plus gigawatts of solar module manufacturing capacity. So does this give us comfort that our current capacity and upcoming 1,100 tonnes per day of capacity can be sold off in domestic markets?
Yes, gives us a lot of comfort. I provided the government does not make any further changes in its policy for solar modules in India.
Sir, the second question is that over the last 2 years, if I see the realizations of Solar Glass has almost been stable, like at around INR 130 -- and -- but our margins have significantly corrected. So is it because of elimination of BCD or the duties? Or what is the reason our margins have corrected while the realizations have stayed the same?
See the cost of inputs has gone up significantly, nearly we're 60%, 70% in the last calendar year. And on the other side, of course, selling prices did decline because of the absence of any antidumping duty with effect from August of 2017. I'm sorry, 2022.
So what we see here is actually an overall price, which is spending over a long period of time, we had certain contracts at older prices and so on, which got executed at those prices. So for all these various reasons, we see that the prices was a bit higher, but they did register a decline in the last quarter.
Okay. So got it. Sir, what will be the current realizations of Solar glass?
So it's slightly lower.
Okay, sir. If you can give a number.
It wouldn't be right to put any number as of now, but it's slightly lower.
Sir, what is the CapEx that we are planning for FY '24, '25, India plus Europe?
We just completed our CapEx in Europe. We spent about significant amount of money there to rebuild our furnace. And it's now, as I mentioned still in my talk, it's about 350 tonnes a day now from 300 tonnes a day. And the furnace is good for another 5 years at least. So we spent money there. And of course, we spend money here. So at the moment, I do not see any special CapEx going in during the current year other than routine maintenance CapEx.
Sir, actually, for the next year, the 1,100 tonnes per day of capacity, we are planning in calendar year 25, -- so how much CapEx would be required for that?
So we are taking a pause as of now because we have just completed a large expansion from 450 tonnes, we have moved to 1,050 tonnes. So we will be reviewing this in the next quarters and so on. and we'll figure out which -- whether to go for 1,100 tonnes or what the project should be. And we will come back to you after that.
The third question is that we had a tough year in Germany due to energy crisis, et cetera. which has also impacted our margins over there. So has the situation normalized in Germany? And if yes, then how much margins can we expect from Germany plant in normal situation?
So there are 2 sources of energy that we use in Germany, one is natural gas and one is electrical power. So the prices of natural gas have stabilized significantly to what they were before the war started. And to that extent, it gives us some comfort that the prices have stabilized. However, the cost of electrical power gets very high.
So that, I believe, is based to a large extent on natural gas. And therefore, I would imagine that the price should be coming down in the foreseeable future. But till that time, I would say that power prices still remain high. I see that the working this year would definitely be better, more improved as compared to last year, which was quite a disaster, frankly.
But in general, in the normal situation, can we make around 20%, 25% margins what we make in India in Germany?
That would be difficult to make in any overseas operations, particularly Europe and Germany. So we believe that 10% to 15% will be a normal margin for that business player.
The next question is from the line of Ramanan an Individual Investor.
Seems like I have a few questions on the acquisitions part. One is like how are you planning to like fund this in acquisition and CapEx plans going forward? Is there any chance of equity dilution going ahead?
We already funded the acquisition paid the money. And now we are incurring CapEx. This is EUR 34 million. And out of that, EUR 24 million is being borrowed from banks, which is already tied up. the remaining money is funded from internal accruals of the company.
So there is no equity dilution chance going?
There is no plan for that particular leg. Whenever we have more CapEx plan for expansion, the time will be reading it.
So my second question, you said there is an antidumping duty request that you put in for government. So how is that in a response from their side? And is it positive? Or like do you expect anything in the future?
So antidumping duty has been discontinued from 17 August 22, though comments as recommended, but finance minister declined it. So there is no antidumping duty that chapter is over. If we want the antidumping duties to come into play, we will have to file the application again for every country like China, Vietnam and Malaysia. And then the entire process will be run, which may run up to 1 year or so. after which 1 can expect antidumping out.
So if I -- correct me if I'm wrong, like my understanding, I heard like we already filed an application for not the case? Or are we still in the process?
No, we had filed application for continuation of antidumping duty against China, which was expiring in August 22. The DGTR analyzed everything, they held the entire process. And after that, the recommended antidumping duty continuation for 2 years. But finance-minister declined it. So that matter is over now. If we want to invoke anti-dumping duty on any of those countries. We had to file fresh application now.
The next question is from the line of Nicola Junker from ICICI Securities.
Sir, my first question is what is the share of solar glass in the total cost of a module.
So it actually depends on which kind of model you are talking about. If it is conversion module, where we use glass in the front and back sheet volume exit at the exit it would be 8%, 9%. If it is a bypass, then it might be 15%.
Okay. Is the bias vision. Sir, my second question will be among the PLS winners who will be ramping up their module facility, so what portion of them are getting into the bifacial module manufacturing?
So basically, all the solar is now being available are bifacial charge, you could eventually make bifacial models from every sale available now. But it all depends on what kind of obligations and what kind of projects you are doing. So if you talk about international scenario like China already almost 45%, 50% is bifacial module.
But it is yet to be followed in the same way in India and Europe. So gradually, it will move higher up in the bifacial models as we go along because earlier the equipment were not capable of making bifacial module in India and so also in Europe, but now they are changing the equipment. And gradually, the increase -- there will be increase in the bifacial model.
And sir, are we in talks with any of these PLI winners to [indiscernible] -- or are being talked with us for getting into any kind of a long-term supply contract.
Actually, most of these people are our customers already, and those who are not also we are in touch with them. And the contract practically have not worked so far, like long-term contracts, but supply arrangements on a monthly basis are there.
And we hope to continue like that because without the price, there is no contract basically and price is something which nobody wants to prefix because of the changing situation. So our glass prices keep changing. Every component price keeps changing and the dynamics of profitability keeps shifting from here and there in the model industry. So nobody wants to have a fixed price.
But basically, all the people who are going to have model capacity will require glass. And higher the domestic value added is there, they will be getting higher PLI. So obviously, it will be interesting for them to buy locally.
So they are not looking to set up their own glass manufacturing part?
Well, Adani and Reliance are looking to set up their own capacities and also maybe like [ Shadysidelectricals ] might look at setting up the capacity. Other than these, we have not had any other player looking at setting up last capacity.
Sir, just a final question, sir, what is the difference in realization for exports and devices? So export realization is higher compared to utilization by about.
Export sales realization is higher compared to domestic realization by about 10%, 12%.
The next question is from the line of Santosh Kucera an Individual Investor.
This is with regard to inventive in asset and agile, INR 174 crores stock inventories is there, in which how much is the finished books and formats [indiscernible]
So Gil, can you respond on this? You want to come back. In the meantime, we can continue with another question.
Yes. And this is with a in [ Popatialone ]results. The power and fuel was last year, it was INR 30 crore now is crores. Why is so much high?
So now we are running third furnace as well, which is a large funds of 550 tonnes per day. So we need to have more power and fuel consumption from 450 tonnes we have leased 1,000 tonne production. So obviously, it will require power and fuel.
But it has not affected in your turnover because production has gone up Parode itself. So the revenue should be the terminal, whether you build our market as you shown inventory.
Yes. So production -- commercial production has begun on 23rd of February. So actually 1 month production is happening -- has happened in March. And there has been some buildup in the inventory as well. which is why the ratio is not appearing this year.
So actually, whatever you are forcing those ports are not being getting sold or sold or you are involved but the Guaranteed.
So there are 2 things. One is that India impact is there, large impact is there of good having been invoiced but not delivered to the customer. So that's a large impact already. Plus, there was some buildup in inventory as well because initially when you start producing, you don't get 100% right material. So 1 is to see for 1 month, 2 months or so before it can sell everything.
So just to clarify on that 170 of inventories, how much is an along it. because we get all the raw material expenses and profit loss amortizing, consume raw material.
Out of INR 174 crores inventory, sir, INR 74 crore inventory is raw material.
And wells inventory got work in progress in stores, taking material and collect.
So have you invited out of the INR 100 as we invest anything?
But Gostoli the party. That is INR 36 crores around.
INR 36 crores, we are sold, but it has not insert -- that is in the store because of [indiscernible]
The next question is from the line of Rishabh from Delalin Bucha.
I have a few questions regarding the company, understanding the company. So Will the management can tell me or have a brief idea about what will be the realization number for 1 MM last that is imported from China in India?
Yes. We obviously have an idea about what prices would come in India. And in fact, the goods are sold as taking benchmarks of import prices. So obviously, we need to know that. but each and every buyer has different pricing. On an average basis, the goods -- if you were to ask me on a per millimeter mass, it will be about INR 110 crores to INR 115 per millimeter.
My next question would be regarding for the third furnace. So the third furnace would be a dual furnace, if you know the dual furnace where in the previous conference calls or in previous investor presentation, it was mentioned that it's run on furnace oil and on the detail. So will that be a dual furnace?
Yes. It will be a multifuel furnace. It can be done on different sources of energy. It could be natural gas could be furnace oil, diesel, LDO put propane LP.
So yes, now my next question will be regarding the number of days for the production of the glass, which is your capacity is INR 1,350 tons per day. So for -- on a yearly basis, if I want to calculate on a yearly basis, so for how many days shall I take for the calculation for yearly business of the production?
You take the entire full year, but generally, 10% would be downtime for the roller change and other things. So generally, 330 days is what 1 can take.
Days, which I heard?
330 days.
And also, can you please give me any update for the ADD by the government, which -- that is that is going to be imported from China by the government. Is there any update on that?
I wish I would love to give you that update. But this is completely beyond our scope, we have been trying very hard, and we are hopeful that we should succeed because we have very good reason for our request for grant of basic customs duty at least, if not antidumping duty. And it's a question of when the government will so have and take notes.
Also, I just have 1 question. Regarding the 67 gigawatt solar production, which was reported as of FY '23. So we -- do we contribute 100% of it? Do the solar glass contribute 100% to it?
No. This installation can be by way of domestically manufactured modules or by imported models. So a large portion of the installations in the past has been with the imported modules.
So it will be incorrect to say that it is made in India like that and we contribute for the model making the domestic module manufacturing, of course, is going up now. So as we speak, the domestic models maybe about 75% of the installation currently happening.
And sir, also, I would like to ask that can you -- can you please tell me how much -- how much would be the export volume, if you can give me some guidance towards that.
Exports are about 25% of the volume.
The next question is from the line of Sagar Shangri from ADD Capital.
I have 2 sets of questions. One on the volume front. Sir, at 1,350 tons per day what would be the full utilization that you've been looking at in terms of percentage? And at full organization, what kind of volume should we be looking at in terms of square meters? Or any volume metric that you can help us understand so that we can model the P&L for that. That is one.
And two, on the raw material front, how should we look at raw material prices going ahead in terms of soda ash prices, are we -- do we have the contact or full year or half yearly contracts? And even on the other gain power.
So on the production side or turnover side, 1 benchmark to take would be that if you were to run both the plants from capacity like India and Germany, the turnover on which one can expect could be about INR 1,800 crores to INR 1,900 crores per annum
But that will also take a particular realization per square meter or something into consideration?
Yes. So that's the reason I've given you a band of INR 1,800 crores to INR 1,900 crores, depending on what the price would be. And what the volume we can expect. In terms of the quantity, if you were to ask me from Indian operations, 1 can expect about INR 5 crore square meter 2 millimeters. And the German operations about INR 1.1 crore square meter 2 millimeter.
With regard to your other question on the cost and prices, we do have supply contracts for Soda is for this calendar year. And this time, the contract on linked to benchmark of quarterly pricing. So should there be any changes in the quarterly pricing, it will be applica
About other fuel for power and fuel, like power, of course
So -- so what would be the margin should we be looking at? Is it a 22% margin.
Will it be a normalized 15%, 16% kind of margin for a consolidated number?
So our margins in the last 3 years have not been below 20%. So it is not right to assume 15% margin. but we expect margins to be between 20% to 25% generally. On a consol basis, not India. Stand-alone [indiscernible]
No, my question was on a consol basis?
On international operations, we see margins to be between 10% to 15% to 12 the console.
The next question is from the line of Anuj Gupta and Individual Investor.
I'm from the English sector, not an evolution. And sir, you mentioned about the market share, domestic market share decline. Can we throw some kind of a number on the export market? I mean what share do we know China as a major player to play out there. But any market share which we can pick for our sales over the.
So there are different markets in which we have different market share. So it is not uniform like Indian market, of course, we can discuss about the market share, and we will not have a complete idea of other markets as well.
So like we are major through our German operations, we know that we have a large market share there. Our German company is holding almost 60% to 65% of the market in Europe. We have another 10%, 12% there. So there's a market share we enjoy there. In Turkey, we may be about again 10%, 15%. And in U.S.A., we are already there, maybe 1% or 2%.
Okay. So this export, which we are doing is largely targeted to what the Euroscan region or to a Europe and Turkey. -- in. And going at, considering the fact that the domestic competition is going to be intense. What would be our strategy in the export domestic composition service.
Is it largely beyond the export market how to develop [indiscernible] .
Yes. We maintain our focus on the export market, subject to the limitation of growth there sometimes. But -- of course, we order to increase our patent in the domestic market as we grow the volumes because the demand and the model manufacturing activity in India is growing very fast as compared to the other countries, other markets. But maybe after 1 or 2 years, USA will become another growth area. But as of now, we concentrate on Turkey, Europe and India.
Okay. And sorry, so I joined in a bit late. I make on your Q4 production and sales volume and also the barbecation among the domestic and export sales, can you.
So the sales volumes have gone up by about 7%, 8% in the quarter, led by the commissioning of SGC, but it has not got a full operations as of now.
We started only from 23rd February, -- so from the current quarter, the impact will come in a major way, and then it will show a right picture.
Right, sir. And the export and domestic mix.
Well, it was about 25%, 26% in export in the last quarter.
And sir, our under agreement on the solar gas expire. And we enter into a new contract business in what time period? And how much is the elevated prices compared to the previous project.
So we are still waiting for the right level of the prices for a new contract. But in the meantime, we are using a major part of our operations furnace oil, which is cheaper than the market-related gas as of now. And market-related gas prices also have come down, but they are still there above frontal prices. When the -- when they are almost at the same level, we'll like to enter into contracts.
So the life is in Europe, even in India, 1 right on that? Likewise, in our European operations, even in domestic market, we are using now for network. This is what you are saying.
In Europe, we are using completely natural gas and option and like that, there is no use of fund as well in European operations. in India, almost about 18% to 20% is the utilization of gas and rest is furnace oil. So that's the mix right now in India. But as and when the prices of gas are right, we will again ship break to gas.
And with the commissioning of this 10-megawatt captive power plant, any rough ever you can make or how much of the saving in the power cost?
How much vehicle say et commission.
We hope to sell about INR 35 crore to INR 4 million per month.
And lastly, sir, in opening remarks, you do mentioned about we are rethinking on the strategy of coming up with the IT4 and 35. We -- when we have a discussion on this expansion we have plan, we have a contract to supply the solar glass appointee. Majority of them are going for the expansion plan of model manufacturing. So the reason to really look at the strategy has to do with the competition because demand, I don't think so it's a concern as now. It has to do with the price. Am I right in my[indiscernible]
Yes. So we would -- we are currently in the process of stabilizing our expansion because after having expanded from 450 tonnes to 150 tonnes, we need to take a pause, and we cannot be in a hurry. And similarly, there are other aspects like on the duty front, there is no clarity as of now, and we cannot only chase the revenue and not the bottom line. So we would not like to sacrifice too much on the bottom line and just as the growth. So we will take the call at a fortunate time to put in money for the next expansion.
And lastly, sir, if at all, we supposedly decide to go ahead with the expansion in next quarter, how much time would it take because [indiscernible] was set of this capacity by FY '20.
They would be sticking to the same time line or there could be competitive 18 to 24.
Yes, it takes about 15 to 18 months anyway. And whenever we take the call from there, it can be another month.
The next question is from the line of Rishabh Shah from Dalal and Roche.
One of the questions which I have is for the backward integration that the company had given the guidance for solar, ash and natural gas.
Are there any updates on the backward integration for that?
No, we do not have any such plans. We have never given guidance to get into the word integration of these products. So I think you seem to misplaced.
And also I just have 1 question regarding, are there any differentiation in the quality of glass that is produced by us and the glass, which are imported from China, Vietnam and Malaysia.
Generally, the quality sale.
However, our quality, there are some differences in composition which gives our glass all longevity, which we do because we believe in making a better product.
The next question is from the line of Susan an individual investor.
My question is pertain to the capital allocation policy. Now in the absence of a big CapEx in the ongoing year, what will be the capital allocation policy -- regarding the free cash flows?
So we are continuously innovating and continuously looking at various opportunities in the business. We have recently started R&D center also in Pune with an objective to develop products or come up with cost saving vases and all.
Whatever cost selling measures are there, then not require large CapEx. But in case we are able to come up with some new products, new ideas, we will discos that, and then we can come back with the plan to do any CapEx on that. So in the meantime, the small CapEx or routine CapEx will continue to do.
My question was whether the free cash flow that we generate this year, whether we will save it for the CapEx that is upcoming in next year or whether we will use it to reduce the debt or a possible dividend payout? What are the management thinking on this?
So I think we will take the call at appropriate time. Right now, we are not in a hurry to decide on that. And our expansion may not be very late as well. So maybe the most quality, the cash flow will be used for next CapEx cycle. But we'll have to take a call the and when we reach that level.
I have just one more follow-up question. So all those our exports were very high-margin products for us. Now that we have a European subsidiary, where is the material that we are producing in Europe is being sold versus where only exporting from the Indian mancapturing houses?
So material produced in Germany is getting sold almost 100% into European market only, whereas we have been exporting to Europe, Turkey, U.S.A., in countries and all the areas where the demand is there. So that's how it is being looked at. Currently, also, we continue to export material from India to European market because there is a higher demand for us, which the general plant came out completely net.
So none of powersports have been sacrificed because of this European marigobecause they contribute only 60% of the market, and there is room available for other players to supply.
The next question is from the line of Siti Anish from Axis Capital.
My first question would be on the Europe business. As you said, the plant has the CapEx done in an asset now. So what would be the contribution from the European plant in terms of foot this year probably? Or what could be -- what is the order backlog because you said ciliation level can be the same as at all and there is a fee room for huge scope in the European market. So what can we see in guidance with you for the ratings from the main plan?
So we can probably expect that over a over INR 550 crores to INR 600 crores from that plant.
And as this margin will be like between 20% and on the 1% to 3% EBITDA margin -- and sir, this INR 500 crore 60 crores is the peak or we can win achieve more?
Well, we have just rebuilt the partners, and we will have to build the rest of production and creating efficiency in all. It could be slightly better, but this is what we normally expect when we start the production. As we go along, we'll try to more improve our productivity on the...
So what is the portion of exports or location with Antilety, I think -- and probably how competitive are we in those areas? That's probably I note that your main exports in Europe and Tapio are we competing with time on those reasons? Is there an in something due to that...
So in both these markets, where something at as China antidumping duty against Malian Vietnam who happened to be the largest quarter to these 2 at all. And we have to compete with them.
We have a follow-up question from the line of -- sir Jan and Investor...
Sir, one question. So in the earlier calls, we have suggested that the pause start would help cerate INR 1,200 crores out of revenue, which indicates to 1.2x asset. But in the previous question, you suggested that our 350 tonnes plant could generate INR 500 crores of revenue, which is much higher asset terms. So is it the case that the European plants are much better in terms of efficiency and productivity.
No. In fact, the prices in Europe are higher to what we are in a
-- and it can generate a better product mix as well because there are a lot of markets they serve, like we now or bifacial markets, which are paying higher amount there. in Indian context, we have to compete with Chinese and our prices remain lower. So that also is another bottleneck in India.
Okay. So sir, regarding Indian manufacturing plan, 1.2x asset turn is still an ideal situation.
This is 1.2 saturn is happening because overseas greenfield, brownfield expansion here, and we have set up the old plants, like I said, 2010 and 2019 and all. But if it was a new plant to be set up in India, the set trend will not be like that. It will be mostly 0.85 or like that. So in Indian context, for our company, you can say it will be 1.2x. But if you were to really look at any greenfield plant, it will be much less than 1.
As there are no further questions, I would now like to hand the conference over to management for closing comments.
Thank you very much for your questions. These have been -- they revealed the interest that investors are taking in the stock and in the operations of the company. I can only assure investors that we continue to remain alive to the situation, and we are constantly working towards making products that would have a higher realization.
We are all working constantly to maximize production and also to keep our costs at the lowest possible level. I do want to inform people that what we have done now is we have installed a very modern, very sophisticated plant, and it just takes time to tune it up and to get the maximum output from this.
So we're hard at work, and we are seeing results every week, things keep getting better. So we are quite confident that in time, we should be able to cover all the points that need to be covered, and we should be able to have a very efficient production from the total operation. Thank you.
On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.