Softbank to invest in the hot Solar Market in India

The Japanese Telecom giant Softbank Corp. will now invest $20 billion in the Indian Solar market. India is witnessing big solar commitments, since its target was upgraded to 100 GW by 2022. Softbank Corp. had made history since it invested in Alibaba, the Chinese e-commerce group. The $20 billion investment in 2000 is now worth $86 billion. Softbank had earlier said it would invest ~$10 billion in India over time. It has already bought stakes worth ~30% in India’s Snapdeal and Housing.com. Now Japan’s SoftBank Corp, together with Bharti Enterprises and Taiwan’s Foxconn, will invest about $20 billion in solar projects in India; where Softbank would be the majority stakeholder. This would be amongst the biggest solar commitments that India would witness. Softbank has plans to generate minimum 20 GW of energy. What is favorable for Softbank is that India has high solar radiation and lower costs, when compared to Japan.

“India can become probably the largest country for solar energy,” Son – Founder Softbank said.

Source: Reuters

Softbank has been investing in India’s e-commerce businesses too. In October last year, it invested more than $600 million in the Indian e-commerce retailer Snapdeal and more than $200 million in the online booking cab website Ola. It also has 36% stake in ScoopWhoop along with Bharti Enterprises. India’s e-commerce market is supposed to be amongst the biggest globally. With the rise of income levels in the India middle-class and the increasing usage of smartphones, the Indian e-commerce is booming right now.

India’s solar market is also hot right now and Softbank’s commitments in India prove that. India has suddenly become a solar hub, where bigger companies from abroad are showing interest. As I mentioned yesterday this is the start of “Achhe din” returning to our country. Not only will these investments improve the situation of power-deficiency, but also open the gates for more foreign investment and hence improve macro conditions in India. I remain highly positive of the Indian Solar market.

Huawei becomes 2nd largest solar inverter supplier

Like solar panels, Chinese manufacturers have crashed the pricing of solar inverters too through large increases in capacity and reduction in process and raw material costs. Solar inverter prices decreased by almost 20% in China last year, as fierce competition for market share drove down solar inverter prices. As per Digitimes, many of the smaller players have left the field unable to compete in prices with the big boys.

Huawei has been the outstanding story becoming the 2nd largest supplier in the Chinese market after Sungrow. Huawei utilizing its experience and scale in electronics and telecom manufacturing entered the ranks of the world’s top 10 inverter suppliers. It has invested heavily into the solar inverter business through marketing and sales campaigns. Sungrow which is a pure play solar inverter focused company is facing a tough time in keeping its No.1 tag.

All this has been bad news for the dominant European companies which have seen their revenues and margins get decimated by the Chinese entry into the business. Solar inverter prices have declined steeply in the last few years falling by about 60%. SMA Solar which used to be the No.1 company with enviable margins and a couple of billion revenues, has seen continuous declines. I don’t think it will be possible for SMA Solar to retain its position. The company does not have any big strength in technology or marketing to be able to compete with the Chinese who can live with very low margins and are extremely aggressive.

IHS

The overall global PV inverter market shrank more than 4 percent in 2014 to reach $6.6 billion, as intense price competition continued and demand shifted further toward lower-priced markets. Market leader SMA continued to lose share in 2014, and the company’s market share is now half of what it was in 2012 and 25 percentage points lower than in 2009. Despite remaining the largest supplier globally, SMA has lost market share for five consecutive years.

Rank   Change
2013 2014 Company Name 13-14
1 1 SMA Solar Technology -3.2%
2 2 ABB -0.8%
3 3 Omron +0.9%
4 4 TMEIC +1.0%
7 5 Tabuchi +1.2%

“Due to global demand shifting toward Asian markets, if suppliers maintained their current market share in each country this year, it is possible that we would see a new global market leader,” said Cormac Gilligan, senior analyst, solar supply chain, IHS. “In fact, for the first time on record, SMA could be displaced as the leading PV inverter supplier, if not in terms of revenue, then quite possibly in terms of MW shipments.”

Because of the seismic demand shift toward Asia, Chinese suppliers experienced a big gain in megawatt (MW) shipment market share; however, those gains did not translate into increases in global revenue share. Average prices in China averaged $0.07 per watt (W) in 2014 compared to $0.16/W globally, which has slowed Chinese vendors’ revenue share gains.

Google is no stranger to competition as it has faced tremendous competitive threats from much bigger competitors in the past. Microsoft and Yahoo poured billions of dollars into their Internet search, but failed to make a dent into Google’s dominance in this market. Google has used the massive cash flows generated by Internet search to invest money into a wide variety of technology fields. Most of them have failed to become significant cash cows, however some of them have huge monetization capabilities (Google Maps, YouTube etc.). Some of its other initiatives are still in their infancy (Self driving cars, Home energy management, wearables). These spaces are quite huge in terms of potential revenues and if Google succeeds in even one of them, it could lead to a significant upside in the future.

But in the meantime, Google will have to safeguard its dominance of the Internet search and the massive stream of ad dollars that it gets. Facebook is the biggest challenge that the company is facing right now, though there are numerous competitors. Facebook has captured a large slice of the Internet advertisement spending in the last couple of years and that is set to increase over the coming years. Unlike other competitors, Facebook’s origin lies in the Internet domain rather than software or hardware for other major technology companies. Facebook has been effectively monetizing the traffic it gets to its site and is luring major content publishers. Its game changing move of convincing major contract providers like New York Times, BBC etc. to directly publish on its site is a big blow to Google. It will not only get the content, but also provide ad exchange services to these news providers. I think that Google will need to up its game to counter Facebook’s threat to its advertisement dominance.

Google has failed in social media

Google has failed in the social media domain, despite being one of the first large movers into the space with Orkut. The company failed to realize the importance of social media and let Orkut die due to negligence. Google once again tried to re-enter the space with Google +. But Google plus has also failed, as people hardly use the service and nobody spends much time on it. Google tried to use its search dominance to push Google plus but that too did not work out. Facebook on the other hand, has become the uncontested king of the social media sphere. Its Whatsapp acquisition was a masterstroke, though the initial price that FB paid made me cringe. Whatsapp has become the preferred mode of communication for vast sections of people around the globe. It is threatening the traditional modes of communication such as telecom and bulletin boards, as people find Whatsapp much more convenient and cheaper. Facebook’s acquisition of Instagram has further solidified its position. The company now has billions of users actively engaging with its social media sites, giving it an unparalleled database of users and their behavior. Google used to be the master of Internet data as most traffic used to go through its search services. However, Facebook has changed the paradigm and nearly 25% of the global internet traffic is now controlled by Facebook. Google has almost no visibility on that 25%. Facebook on the other hand has a very granular understanding of the traffic, while Google still cannot identify the true users of its search that accurately.

Facebook is becoming a powerful mobile force

Facebook has managed to increase the time that people spend on its sites to such a level that almost 25% of all Internet traffic is now being monopolized by Facebook. The company is getting 37% of the mobile share display ads and its mobile ad revenues have doubled to ~$2.5 billion a quarter, as compared to last year. Facebook has managed to increase the price of the ad it displays, because of deep knowledge of the consumer it is serving. Advertisers are paying for the targeting value that Facebook brings to the table. Facebook is also copying Google by opening a mobile ad network. The company’s marketshare of desktop has declined, but it is not a concern as the general move towards spending more time on smartphones and tablets is irreversible. PCs have become less relevant in consuming digital content. Facebook is becoming the gateway to Internet to a lot of people displacing Google. Consumers are using Facebook as the principal delivery mechanism for news, communication (Whatsapp, Facebook Messenger) and product reviews. This is an alarming thing for Google which used to be the principal Internet entry point for consumers. While a lot of people still use Google to get product reviews, information and news, Facebook is definitely threatening Google. Facebook is also threatening Google’s dominance in the Internet video category, with a lot the people watching videos through Facebook.

Thanks, Douglas. So with mobile phones really becoming such a primary way people search the net. Our goal is really to help people search, find the content that’s not just relevant and timely but also really easy to read and interact with on these smaller devices and smaller screens. And it’s important to note that this is just one of over 200 signals we use to evaluate the best results.

Source – Google transcript

GOOGL Chart

What Google can do to stave off this threat

Google does not have the social media skills as repeated failures have shown. Google is using Internet search to provide more information and services to consumers. It is starting to give real time flight information and phone numbers of merchants. It is even planning to allow users to directly buy from its internet search results. But I think that these incremental changes will not help. The company needs to acquire social media skills. Buying other major social media players such as Twitter or LinkedIn is one option. These companies have the skills that Google lacks and will help in creating a social media presence, which can leverage its other services such as email, search and video.

Google’s Stock Price Performance and Valuation

Google’s stock price has stagnated over the last one year and it has underperformed the broader market. The company’s revenue and earnings growth has not been that good and its new initiatives such as Google Glass, Driverless cars etc. have not positively impacted the bottom-line. With tepid growth expectations the valuation has also come down substantially and is becoming more in line with large technology companies such as Microsoft, Apple and others. The company’s forward P/E is 16.5x while its 5 year growth expectations is at 14.5%, which gives it a PEG ratio of ~1.1x.

Summary

Google is no stranger to competition, given that in its short operating history it has succeeded in driving off major technology companies like Microsoft through the sheer superiority of its products. However, Google has remained a one trick pony with Internet search continuing to drive most of its products and revenues. Internet search is becoming less relevant with the increasing popularity of smartphones and apps. A lot of consumers are skipping Google to directly interact with other company’s apps. Facebook has become a dominant Internet force, with American consumers spending almost 42 minutes daily on Facebook using their smartphones. As a result, Facebook is capturing an increasing share of digital ad dollars. It is being able to serve much deeper insights into consumer behavior, as compared to other publishers. Google is facing a threat to its core business segment. I think Google needs to react quickly to stave off this threat. The stock valuation is not expensive, but the growth is tapering down.

Updated on: 2nd June 2016

List of Solar Panel/ Module Manufacturing Companies in India

1) Tata Power Solar

Headquartered in Bangalore, Tata Power Solar has a 200 MW and 180 MW of module and cell manufacturing facility located in Bangalore. The company is engaged in manufacturing and EPC services. The company is trying to increase solar awareness in the remote parts of India. The company has commissioned 175 MW of EPC projects, 43 MW of solar rooftop projects, and exported 600 MW of modules till date. Tata Solar has a presence in industrial, commercial, both on-grid and off-grid solar projects and residential. The company is backed by the Tata Group in India. The solar panels consist of 36, 60 and 72 six inch multi-crystalline cells and have a 25-year warranty, with power range varying from 0.3 W to 305 W. The modules come in two makes:

i) Standard modules – TP250, TP300 and TS 250 series, ideal for rooftop installations and utility-scale projects.

ii) Specialty modules – Tata Solar Gold and Platinum series, ideal for indoor, outdoor, street, billboard lighting, remote telecom sites and standalone systems for the home.

The company has also executed certain projects in UK.

Compare and buy the best selling Solar Panels in India here.

2) Su-Kam

Su-Kam is considered to be India’s largest power solutions company. The company is the largest solar inverter manufacturer in the country. Su-Kam also has a presence in the residential EPC market in India. Su-Kam Solar panels come in a wide range from 10W – 250W. These panels come with 25 years warranty and are designed to withstand the extreme weather conditions in India. These panels are shock resistant with thick iron glass and an anodized aluminium frame. They can generate a maximum of ~16V-30V, depending upon the wattage.

3) Vikram Solar 

Headquartered in Kolkata, Vikram Solar is a manufacturer of PV solar modules. The manufacturing plant has a 150 MW installed capacity in West Bengal. They manufacture polycrystalline modules and are available in six series under the name Eldora. Read more details here.

i) Micro series – 18/36 celled having applications in Home and Street Lighting

ii) Mini, Core, Ultima and Grand series 48, 54, 60 and 72- celled respectively, used in On-grid rooftop domestic and commercial systems & Off-grid residential systems.

4) Waaree Solar

The company has a 250 MW solar panel manufacturing unit in Surat, having a presence across the solar power value chain. These are monocrystalline/ multicrystalline silicon solar panels. The company has an experience with solar thermal and EPC utility grid projects. Waaree manufactures a wide range of solar products ranging from solar modules, to solar water pumps and rooftop solutions. Read more here.

i) Surya series – with either 18 cells or 36 cells. These modules can be used in solar chargers, solar gadgets, solar lanterns and other home lighting solutions.

ii) Arka series – with 36 cells. These modules can be used in home lighting solutions, street lighting, water pump and off grid systems.

iii) Ravi Series – with 36 cells or 72 cells. These modules can be used in home lighting solutions, street lighting, water pump and off grid systems.

iv) Marica series – either 54 cells or 60 cells, used in used in off grid and grid tied systems.

v) Aditya series – 60 cells, 72 cells or 80 cells modules, used in utility scale, off grid and grid tied systems.

vi) Color & flexible series – 36 celled modules and BIPV modules.

5) Indo Solar 

Is a manufacturer of solar cells and modules, located in Greater Noida Uttar Pradesh. The current manufacturing capacity is 450 MWp, with an average efficiency rating of 17.4%. They manufacture 36 celled polycrystalline silicon panels, with 5 years workmanship warranty. Their modules are of two types:

ISL 40W – 100W and ISL 120W – 150W.

6) Loom Solar

Loom Solar is a fully integrated solar module manufacturing company with an annual manufacturing capacity of 100 MW. The company manufactures both polycrystalline (10-345 W) and monocrystalline (50-340 W) modules. These panels come with a 25-year limited warranty on 80% power output and 10-year limited warranty on materials or workmanship. Some features of the solar panels manufactured by Loom Solar include positive power tolerance, usage of 5 busbar technology, low-light performance and are PID resistant.

Other international suppliers in India

Besides these eminent producers in India, there are certain international players gaining traction in India. First Solar a leading thin film manufacturer has captured a sizeable portion of the Indian solar market. The hot climate of India is ideal for its thin-film modules. According to Bridge to India report, Trina Solar and Canadian Solar were top-selling international brands in India in 2014. Others like Jinko Solar, ReneSola and Yingli Green Energy are also selling panels in India. These international panels are of good quality and also less expensive than the domestic ones. The average selling price in India is still ~60 cents per watt, whereas Jinko Solar panels will be available to you at approximately 40-45 cents per watt. However, with India’s new solar target of achieving 100 GW of solar power by 2022 and the Prime Minister’s “Make in India” initiative, we hope to see more of such India panels in the market.

Other Local Suppliers in India

In addition to the list above, there are numerous small companies also engaged in the manufacturing and supplying of solar panels in India. Look into this space to find out more about the state wise solar panel distributors present in India.

Note: Interested companies may also list with us by an email to greenworldinvestor@gmail.com or by entering their details in the Business leads section above on the website, for getting business leads.

India

The Indian stock market has been on a roll since end 2013, as poll forecasts started to predict the end of the corruption ridden and rudderless, leaderless Congress government and the potential win of the BJP led by reformist Narendra Modi. Since then the stock markets have climbed up by more than 50% as the predictions came true and the new government started to slowly but surely unveil reforms and cut wasteful expenditure. There has also been no new scams under the new government unlike the old one where every month there was a new scandal – oil, telecom, realty, sports, coal, media etc.

The Indian stock market touched a new high with Sensex crossing 30,000 for the first time in its history. However, the markets have started to fall since then and fell by around 3% in the last week. Not a significant fall and cannot really be said to be a change in trend. However, the global macro picture has become darker and darker by every week. Emerging markets such as Turkey, Russia, Brazil etc. have been falling sharply as dollar increases in strength. These countries are suffering from the sharp falling commodity prices and issues with their political management. Inflation is rising in these countries and confidence is falling. They are also suffering from deep corruption problems – Petrobas in Brazil, while Russia is basically institutionally corrupt with some putting Putin’s wealth at more than $100 billion.

Though India has remained almost totally insulated to the macro issues with foreign investors pouring billions of dollar every month, it cannot remain immune to the global decrease in equity valuation for emerging markets. While European and USA stock markets remain near the peaks, valuation for emerging markets have come down. India is a huge beneficiary of falling oil prices which has helped cut inflation and trade deficit. So falling oil is not a problem but there is a reverse side. Falling oil is not only due to higher supply, but portends slowing and falling demand. This will hurt India’s exports as main markets in Europe and China slow down. India’s currency has appreciated sharply against Euro, Yen and other currencies which makes it harder to export and grow its economy.

Some commodity price falls are hurting domestic companies such as Hindalco, Cairn, ONGC etc. These companies will have to lay off workers as they see slowing growth. This will offset some of the large gains being made by Indian consumers and manufacturing companies. A global risk off could hurt India immensely, as it is still trying to grow back its manufacturing and service engine. Sentiment has improved sharply but situation on the ground has not. If there is a financial event globally, then sentiment could reverse dealing a strong blow to India’s growth chances. India is dependent on foreign capital for growth given the high cost and limited capital in India. If foreign investors turn their backs due to risk aversion, then it will decrease India’s potential growth.

All said, India will remain one of the world’s best growth stories over the next 5 years. However, growth rates may not be that high.

Corruption In India

Indians have to deal with blatant corruption in their faces every day, as political parties indulge in shameless looting of billions of dollars every year. This is not isolated to one party but all mainstream political parties and their corporate cronies are responsible. Some industries like real estate, telecom, liquor etc. which are heavily regulated by the government are more prone to corruption. These monopolies generate vast rents for the politicians and their associated business entities. In fact some of the biggest corporate names in India such as Sun TV etc. have reached their current business heights by building on their political associations.

Some of them like Wave Group have become billion dollar entities by constantly bribing and snoozing with political parties. The Wave Group has made billions in real estate and by cornering liquor licenses in some of the largest states in India. Every Tom, Dick and Harry knows that the Wave group is massively corrupt but no one can do a thing about it. The Group is not a shadowy figure but is making a huge mall in one of the upcoming cities of India. Similar is the case with other robber baron business groups either run by a political party or by paying vast sums of money as patronage.

Tamil Nadu is another state which sees massive corruption by two major regional parties DMK and AIDMK. Both parties are totally seeped in corruption and arrogance. The whole liquor and cable TV monopolies are controlled by the parties in power. They dole out licenses and factors to their favored businesses blatantly. Earlier the DMK government made it impossible for any of the major cable national companies to operate in the state, with the Sun TV cable company dominating. Similar is now the case with the liquor license. The monopoly marketer TASMAC now buys liquor from an AIDMK controlled liquor manufacturer, while top national companies such as USL cry foul in their national annual reports.

Nothing comes out of corruption investigations. Earlier DMK ruled politicians wreaked havoc with India’s telecom industry through massive scams. The kingpins and queen pins like Kanimozhi are out free enjoying life after spending a few months in jail, as India’s lethargic judicial system fails to punish the guilty. This only emboldens more people to operate massive scams. Despite these corruption scandals being run openly and public money loot happening, nothing gets done. This continuously erodes faith in India’s legal system and constitution as powerful people freely violate laws.

ET

Why TASMAC and its inner workings have never really been exposed is possibly due to the unsaid code among politicians — live and let live. Both DMK and AIADMK leaders have close associates running distilleries and breweries. During a DMK regime, the DMK’s associates are favoured but the AIADMK associates are not completely wiped out — vice versa in the AIADMK regime.