Ahead of rivals in lithium-ion battery business: Exide MD
Storage battery major Exide Industries feels it is far ahead of its competitors in lithium-ion battery business in terms of “customer connect”.
Present order book of the company’s module and pack making facility stands at around `600-700 crore and it would be executed in the next 12-15 months. “The orders have come from two-wheelers, three-wheelers, commercial vehicles and telecom (OEMs),” Exide Industries’ managing director and chief executive officer Subir Chakraborty said during an earnings call for analysts and investors.
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The company, forming a joint-venture with Switzerland-based Leclanché SA, has been making lithium-ion batteries modules and packs in Gujarat. It formed the joint venture in June, 2018, in a bid to foray into lithium-ion battery systems and energy solutions, eyeing India’s electric vehicle (EV) market.
Exide is currently setting-up a green-field multi-gigawatt lithium-ion cell manufacturing plant in Karnataka. For this, the company has entered into a multi-year technical collaboration agreement with China’s SVOLT Energy Technology.
“Ultimately, the cells will be produced in our own factory in Bengaluru. Construction of the plant has already started. The customer connect has started a long time back through our module and pack making facility. And this will flow into the Exide Energy Solutions once we start making the cells in our own factory,” Chakraborty said.
The battery major set up its wholly-owned subsidiary Exide Energy Solutions for setting up the manufacturing plant of lithium-ion batteries and storage solutions in 2022. The cell manufacturing factory is likely to start operations by the end of FY25. In the first phase of the `6000 crore project, the company would be investing around Rs 4000 crore.
“We are far ahead in the customer connect race vis a vis I would say the other players in the field because our module and pack making facility is already on stream,” Chakraborty pointed out.
Asked about the plant reaching an optimal utilisation point, he said, ideally plant stabilisation of a lithium-ion cell facility takes about six to eight months. “Once we start the actual production run, we will have to see how and to what extent we can quicken this timeline. But, internationally, this is the kind of timeline it takes. But, we hope that with the help of our collaborators, we will be able to compress this time,” the MD added.
“For the lithium-ion project the company invested Rs 715 crore so far,” informed Asish Kumar Mukherjee, director- Finance and chief financial officer.
“It has tied up with SVOLT for Li-ion manufacturing and is in discussion with 2W, 3W, CV and telecom OEMs. However, as domestic PV OEMs have already tied-up with other companies for the procurement of EV cells, the company’s addressable market size will be limited. We have assumed Li-ion battery business revenues of Rs1700 crore and EBITDA margin of 5% in FY2026E,” Kotak Institutional Equities said in its report on Exide Industries.
“Although Exide Industries will be foraying into the EV battery space over the coming years, it needs to secure orders from OEMs. Given limited opportunity in the EV PV segment, the company will have to win orders in other segments. The valuation remains fair at the current juncture and a re-rating of the stock will depend on its ability to transition to lithium-ion technology,” the domestic brokerage firm observed.