Why Borosil Renewables Has No Local Competition

Fans of Peter Thiel’s Zero To One book and its focus on building monopoly businesses will be drawn to the Borosil Renewables story. But will they buy into it?

The 10-year-old company has in that decade remained India’s only manufacturer of solar glass, used to make modules for solar power generation. In that time India has doubled its emphasis on solar power with a target of 100 gigawatts by 2022. And though the country is barely halfway there, even that’s generated considerable opportunity for module manufacturers and in turn Borosil Renewables Ltd. In 2019, it completed a more than doubling of capacity, from 180 tonnes per day to 450 tpd. It’s now embarking on a plan to take that to 950 tpd in 18 months and just raised Rs 200 crore via share sale to institutional investors.

Yet, no other company has been drawn to this business?

It’s a very taxing and demanding production process, Pradeep Kheruka, the company’s promoter and executive chairman, said in an interview to BloombergQuint. “A lot of technology goes into this plus we’ve been in this now for the last 11 years and we have whittled down our costs to so much that even though the competition from China is heavily subsidised, we’re still able to compete with them and in the second quarter of this financial year we were able to achieve 28.5% Ebitda, which is quite decent.”

It’s unclear what specific technology may be serving as a barrier to competition. The company has no earmarked R&D budget. When asked about it in a post-earnings call with analysts Kheruka had said: “a lot of R&D is done on the fly which means while we are manufacturing the glass we take certain steps to change certain things and do certain things, so that usually goes in the cost of production only”.

When pressed all Kheruka explained in the interview is that the company’s technology moat is derived from the Borosil group’s 50-year experience in glassmaking. Kheruka is also promoter and chairman of Borosil Ltd.—a leading glass and glassware manufacturer.