Tata Power Solar System’s chief executive Ajay Goel talks about the threat cheaper imports from China pose to the domestic solar manufacturing industry in an interview with FE’s Viraj Nair. Tata Solar Power has been running its 125-MW module-making plant at 20-30% of its capacity and has been forced to put its 80-MW cell making unit idle because of weak demand.

Indian solar panel makers, including rivals such as the country?s biggest manufacturer Moser Baer India, Surana Ventures and Indosolar, are facing stiff competition from China where a glut of supply has prompted inventory clearances. Goel, who previously worked for US solar wafer maker MEMC’s Sun Edison unit, was brought in last year to breathe a new life into the solar division after Tata Power completed the buyout of British energy major BP’s stake in the joint venture. Excerpts

Given the state of the global solar industry, what policy measures are required to stimulate the manufacturing sector in India?

There are two sets of policy actions being investigated by the government to stem the onslaught of Chinese modules into India. One is the anti-dumping committee, which was launched last November. It has collected data from various industry players, including Tata Power Solar.

We are hoping over the next 2-3 months, they will come up with a preliminary or provisional tariff on imported Chinese modules. US has already imposed a 35% anti-dumping duty on Chinese products and the European Union is also in an advanced stage of the same investigation. In fact, starting April, the EU has mandated that every imported Chinese module be registered. Ideally, the same level of duty that the US put is the minimum that is needed to improve the industry’s health.

The second important policy measure is domestic solar cell requirement for the next phase of Jawaharlal Nehru National Solar Mission (JNNSM). The last round of bidding said you need to use domestic cells, with the exception of thin film. So everyone started using thin film cells instead of crystalline. In the next phase, they’re promising to remove that exception for thin film and endorse the use of domestic modules and cells in a clear way. This is supposed to be announced in the next three months. At the same time, there is also vested interest calling for the government to not take such action.

You have in the past spoken about the possibility of closing down your manufacturing operations, is it still an option?

After there is more clarity on these policy decisions, we’ll decide whether to invest more in our manufacturing business or to take the tough call of shutting down our manufacturing business. The fate of this business rests in the government’s hands. Having said that, we’ve been in touch with government officials, including Farooq Abdullah, the minister of new and renewable energy. The talks have been positive and there is understanding of the challenges we face. Therefore, I’m optimistic these policies will be introduced within the next three months.

How is your financial performance compared to last year and what is your outlook for the year ahead?

This has been a rough year. I think of this as an inflection year where our numbers are nowhere close to the year before when revenue came in at around R930 crore. At the same time, I can see the trajectory for next year looking quite positive as some of the actions we’ve taken to refocus our business start to pay off. We’re trying to make sure manufacturing remains competitive. In the projects and products businesses, we need to strengthen our go-to market, and we’re actively working on this.

As many domestic solar panel players face mounting debts and the threat of bankruptcy is Tata Solar Power’s balance sheet still looking healthy?

We have a significant amount of long-term debt on our books by virtue of capital investments to set up our manufacturing capacity. Unlike some of our competitors, we’re financially healthy and not in a state where we have a need for financial restructuring. However, we have mostly rupee debt, which is a burden that we’re bearing on a day-to-day basis. We are looking at ways to reduce our debt load and interest costs such as replacing rupee debt with overseas debt, but there is nothing specific as of today.