CleanMax Solar, one of the biggest solar-rooftop firms in India, has recently bagged a Rs 700 crore investment from US-based private equity firm Warburg Pincus. In a conversation with ETEnergyworld, Chief Executive Officer (CEO) Gajanan Nabar talks about the investment, impact of GST on the company’s business and the need to make the solar sector self-sustainable.
With Warburg Pincus investing Rs 700 crore in CleanMax, what is the immediate plan of action?
As India’s largest rooftop solar developer with a market share of 24 per cent, the funding will primarily be utilised to maintain our leadership position. While we currently operate solar farms in Karnataka and Tamil Nadu, we will use the funds to continue our rapid growth in the open access solar power markets in India. Additionally, we are keenly looking to increase our sustainability product offerings to corporates by venturing into energy storage solutions by combining it with Rooftop Solar plants. International expansion is also on the cards, with our operations in UAE set to commence shortly.
With a 5 per cent GST rate fixed for solar, what impact do you think it will lead to?
The introduction of the Goods and Service Tax (GST), which is the single largest tax reform by the Government of India, is an excellent initiative to bring about the ease of carrying out business. Under the gambit of the GST, the solar power plant, which is the input, is taxed, whereas electricity as an output is not taxed. As a result of this, we have unusable credit on GST, which is a minor challenge in the cost competitive solar Industry. However, we are trying to offset this by offering improvements in quality and reduced construction time. Overall, while there are initial hiccups till we fully comprehend the system, the long-term benefits of GST will outweigh them and will not be an obstacle for the solar industry growth story in India.
What is your view on subsidies for the solar sector?
Subsidy is not a sustainable thing for any sector in the long run. It is required for any new technology or business model in order to bring a disruptive change to begin with. However, it is not stable in any economy to continue with it. The government is doing the right thing since the cost of solar projects is going down and the performance is improving, the industry can eventually function on its own.
We are doing a lot of our businesses without any subsides.
What are the main challenges the sector is facing?
From the rooftop perspective, net-metering is certainly one. Wheeling and banking charges are also a challenge. In some states, there are no wheeling and banking charges for open access. But there is still a long way to go as the sector is just emerging. I do feel the overall approach of the government is very positive. As an industry, we can keep asking for more subsides but that is not how you want to build a sustainable business. Let us not forget that we are very dependent on imports and that is one element which is beyond the ambit of the Indian economy. Trade relationships and other geo-political challenges come into play. What is required is more clarity on vision, alignment of discoms with state governments and boards with central government.
Cleanmax deals with rooftops for the commercial segment. Are you also looking to target residential customers?
Not currently but it is on the horizon and we will certainly look at it.
What is your current capacity target for this fiscal?
It is around 300 MW which includes rooftop. We are seeing exponential growth in rooftop as we more than doubled the business last year. So we are hoping to continue like this. We have installed over 100 MW as of now. We are also looking at international markets — the Middle East and Southeast Asia.
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