Nearly five years after it was announced, Fab City, which had placed Hyderabad on the semi conductor and chip manufacturing global map, has just two companies wobbling to make solar modules and allied products.

“Only two companies are operational in the industrial park,” confirmed an official of the APIIC, the nodal agency that gave the land and other infrastructure for Fab City. The Andhra Pradesh go­vernment had earmarked about 1,000 acre for the purpose. In the beginning, more than 25 companies had expressed their interest to be part of park, attracting $ 9.5 billion investments in phases.

The government, as matter of policy, has been sending notices to them asking them to start work on the project or be relieved of the land allotted.

In the same count, the government had earlier cancelled allotment of land to 19 companies, including Moser Baer (100 acre) and MIC Electronics (15 acre), among others after they failed to execute the projects. SemIndia, billed to be the anchor unit, projected an investment of $3 billion (about Rs 15,000 crore), struggled to achieve even financial closure.

Dinesh Kumar, managing director of XL Energy, one of the companies that has been allotted land, said: “It is not just in India but across the world that the solar industry is not doing well for the past few years. Solar-based industries are not in a position for any capital investments.” His company invested about Rs 340 crore in importing equipment for modules and needs another Rs 50 crore for the 120-mw capacity plant to be operational. “We are hopeful of doing that this calendar year,” he said adding that the company has faced difficulty after several export orders were cancelled.

Out of the Rs 340 crore spent, about Rs 180 crore is the loan component and the company has already gone for a CDR, Kumar said.

“The investment proposals were based on the then prevailing prices of solar components. However, the prices dived more than 65 per cent making the estimates go haywire. The industry was expecting to grow 60 per cent but saw only 10 per cent growth,” said Narender Surana, managing director of Surana Ventures, one of the two companies that are operational at Fab City. Another company, Solar SemiConductor, has begun production but remained cautious in view of the market conditions.

Key markets in Europe, particularly Germany, France and Italy, have cancelled orders due to fragile financial condition over the past few years, said Surana.