Public sector lender Central Bank of India (CBI) has filed an insolvency petition in the National Company Law Tribunal (NCLT) against solar panel manufacturer Moser Baer Solar (MBSL) under Section 7 of the Insolvency and Bankruptcy Code. NCLT’s principal bench in New Delhi will hear the petition on August 16. A subsidiary of Moser Baer India, MBSL’s gross debt stood at Rs 772 crore in FY13 (latest available) and reported a net loss of Rs 207 crore on revenues of Rs 226 crore in the same period, Capitaline data showed. Once the petition is admitted, NCLT would appoint an interim resolution professional, who will come up with a resolution plan along with a committee of creditors. If the committee is unable to find a solution within 180 days — this can be extended to 270 days — the company will go into liquidation.
Operating under sub-optimal levels in the face of rising imports from China, MBSL has been in financial distress for several years now. The company had sought restructuring of Rs 956 crore of debt in 2012-13 but failed in October last year. Some lenders have already issued loan recall and wilful default notices to MBSL.
However, Moser Baer India, in its latest annual report (March 2016), said that the implementation of the corporate debt restructuring scheme was affected owing to a delay in receipts of special incentive package scheme capital subsidy from the government and non-release of working capital limits by lenders. Domestic solar panel manufacturers are in trouble owing to indiscriminate imports from China. The ever-falling solar tariff has been salt to the wound, resulting in production closure for a few others. The per-unit price of solar power dropped to Rs 2.44 on May 9, 2017, from Rs 10.95 in December 2010.
In the face of rising imports of cheaper Chinese modules and a World Trade Organisation mandate invalidating a government policy that favoured local module manufacturers, the market share of domestic players is continuously shrinking. According to renewable energy research agency Bridge to India, the country imported $3,197 million worth of solar photovoltaic cells in FY17, up 36% year-on-year.
Meanwhile, the government has recently initiated an anti-dumping investigation against import of solar cells from China, Taiwan and Malaysia following a plea by the Indian Solar Manu.