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Waaree Energies Ltd

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BSE Code : 544277 | NSE Symbol : WAAREEENER | ISIN : INE377N01017 | Industry : Capital Goods - Electrical Equipment |


Chairman's Speech

Dear shareholders,

Humankind stands at a decisive moment when, for the first time in recorded history, it enjoys access to affordable sustainable renewable energy. This indicates that this limitless resource can be harnessed affordably, opening up infinite possibilities for enhancing well- being and prosperity. This reality places a premium on speed and sustainability for companies engaged in manufacturing renewable energy generation equipment.

The objective is not merely to build and market more, in order to generate higher revenues or surplus, but to manufacture competitively, service a rapidly growing market and ensure that the benefits of this landmark technological development accrue to all.

At Waaree Energies, we went into business with this missionary objective, recognising the importance of being engaged in a business that could change lives, combat climate change and create a safer world for humankind.

The company took this priority more seriously than one would expect, by responding with the urgency that it warranted. The company was not just committed to building, but to building with speed. The company was not merely committed to scaling, but to building one of the world's largest solar panel capacities. The company was not merely committed to marketing solar panels, but in creating a competitive advantage that translated into superior capital efficiency.

We believed that this differentiated approach - the ability to seek specific outcomes beyond the generalised - would accelerate us towards a larger scale, strengthen economies, generate superior margins, enhance reinvestment, increase the role of net worth over debt, strengthen our credit rating and create a growth engine that would be safe, secure and sustainable.

I am pleased to report that this strategic clarity has helped Waaree Energies emerge as arguably the world's largest solar panel company outside of China. This positioning empowers us to play a decisive role in offsetting climate change, moderating the role of fossil fuels, catalyzing India towards its stated goal of achieving 500 GW in renewable energy capacity by 2030 and creating a competitive advantage for India in the global community of nations.

At Waaree Energies, we are proud to play a distinctive role in helping India transition its energy landscape. During the last couple of decades, India's per capita consumption of energy has increased sharper than in most countries. This has raised the apprehension that, if left unaddressed, an increase in the consumption of fossil fuels could accelerate greenhouse gas emissions. By the virtue of scaling our manufacturing capacity with speed, we are playing a critical role in moderating India's emissions, transitioning the country with speed to a clean energy alternative.

There is a second contribution to the Indian growth story that we are proud of. Historically, Indian manufacturers lacked scale and technology. This compelled India to import products and technologies, remaining restricted in freedom and capability. The result was that most Indian players, dependent on imported technology, remained sub-optimal when it came to their manufacturing capacities and these capacities being small, were not taken seriously at a global level.

At Waaree Energies, we have emerged as a game-changer for good reasons.

First, we have increased our manufacturing capacity significantly in the past three years, which is considerably higher than the Indian renewable energy sector's average growth. The result is that we are bringing to our space a corresponding seriousness.

Second, we manufactured solar panels within India, creating an ecosystem within the country for components, one of the first such instances being attempted within the country.

Third, we exported products to more than 20 countries. In FY 2022- 23, Waaree Energies generated an aggregate of H46,165.39 million from exports, validating Indian quality in a technologically complex space.

Fourth, by the virtue of being able to manufacture a product that compared well with the best in the world, the company was empowering customers - in India and outside - to switch to a cleaner and cheaper energy source, enhancing their downstream competitiveness.

The bottomline is that Waaree Energies is not merely engaged in building a larger and more profitable company; it is engaged in building a competitively modern India and world.

At Waaree Energies, we believe that our operating headroom is vast and perpetual. Our opportunity is large enough to provide multi-year revenue visibility, which is reflected in our order book of H4,31,129.40 million as of March, 2023. We grew our revenues 51.21% in the three years ending FY 2022-23 and we expect to sustain our growth percentage even on a larger base moving forward.

At Waaree Energies, we have responded to this opportunity with a robust business model. We have expanded our manufacturing capacities to 12 GW recently, aiming for an estimated 20 GW by FY 2024- 25. This expansion is expected to consolidate our leadership in India, where our nearest competitor is only a fraction of our size.

We will grow our business through net worth, from the surpluses we generate and timely infusions of external capital. We believe that each dilution will be value-accretive for the company without excessive equity dilution that could have otherwise impacted earnings per share or the promoter's ownership.

We have prioritised capital efficiency to counter the possibility of operational slackness during a phase of rapid growth. In view of this, the company engaged a leading international management consultancy to propose improvements, including digitalisation, that can enhance our systemic efficiency. This is expected to keep us lean even as we grow rapidly, enabling us to generate incremental margins and reinvest surpluses to satisfy our growing appetite for capital.

We are expanding the frontiers of our value chain through backward and forward linkages. Over the next two years, we intend to manufacture silicon ingots and wafers, which will make it possible to produce panels at competitively a lower cost. We are in the process of setting up one-megawatt green hydrogen manufacturing capacity, as well as exploring opportunities in electrolyze production. This will empower the entire value chain, tapping into emerging downstream renewable energy forms that could strengthen our position as a one-stop clean energy solutions provider.

We will continue benchmarking our solar panel technology against cutting-edge standards, aiming for a capacity utilisation factor (CUF) higher than the prevailing average and reporting solar panel degradation slower than the industry average - the foundation of our operational sustainability. Besides, a portfolio of certifications, in terms of their number and stringency, is expected to open larger markets and attract more marquee clients, catalyzing our growth.

We will keep deepening our governance through a Board of Directors comprising professional individuals of standing. Our company consists of a responsible convergence of family members with specific responsibilities, coupled with professionals. We are a process- driven organisation, guided by modern management practices and certifications. We are delving deeper into digitalisation, automating processes and enhancing operational efficiency. As a validation of our governance, Waaree Energies has been rated as a Bloomberg Tier One company, the only Indian company to receive this recognition for more than eight successive years.

At Waaree Energies, we believe that the confluence of these realities will help us retain our sectorial leadership, translating into enhanced value for all our stakeholders.

Hitesh Chimanlal Doshi

Chairman & MD