How Exide Industries is Powering the Future of India's EV Battery Megatrend

From humble beginning as a lead-acid battery manufacturer in 1947 to becoming India's leading battery manufacturer, Exide Industry has established itself as the powerhouse of India's battery market, including lithium-ion batteries and energy storage solutions.

With a rich heritage spanning over 75 years, Exide has been a cornerstone of India's battery industry, evolving to become not only the nation's leading battery manufacturer but also a global player as the world's fourth-largest producer of automotive and industrial lead-acid batteries.

Adapting to changing trends, Exide has consistently expanded its product portfolio.

As the transition to EVs gains momentum, evidenced by the increase in electric two-wheeler market share from 4.4% in FY23 to 5% in August 2023, as per Vahan data, Exide Industries is strategically positioning itself to seize these opportunities through its venture into lithium-ion cell manufacturing.

The Game Changing Lithium-Ion Cell Venture

Exide Industries is setting up a lithium-ion cell manufacturing plant in Bengaluru, Karnataka, India. The first phase of the plant is expected to be operational by the end of the next financial year (FY25).

The Bengaluru lithium-ion cell manufacturing venture will be one of the largest in India. The plant is planned in multiple phases, with a total capacity of 12 gigawatt hours (GWh).

The initial phase, constituting 6 GWh, necessitates an investment of approximately Rs 40 billion (bn), while the overall project cost of Rs 60 bn will be financed through internal accruals and bridge loans.

This move is aimed at securing an early-mover advantage in the thriving electric vehicle market, with nearly 70% of the anticipated lithium-ion battery demand earmarked for automotive applications. The remainder, around 30%, will cater to industrial usage.

Exide Industries is financing the project through internal accruals and bridge loans. The company has already secured 80 acres of land from the Karnataka Industrial Areas Development Board (KIADB) for the project.

Construction of the plant is underway, and the company is making swift progress.

The Bengaluru lithium-ion cell manufacturing venture is a significant investment by Exide Industries and is expected to help the company strengthen its position in the growing electric vehicle (EV) and energy storage markets.

Expansion Drive to Drive Growth

Exide Industries has invested over Rs 1 bn in its wholly owned arm Exide Energy Solutions, which is into manufacturing advanced chemistry battery cells in Gujarat.

Exide Energy Private Limited (EEPL) makes the Nexcharge brand, supplying lithium-ion battery modules and packs. Nexcharge has an order book of around Rs 7 bn, which will be executed in the next 5-12 months.

EEPL will eventually merge with Exide Energy Solutions (EESL), which is currently establishing a lithium-ion cell manufacturing project in Karnataka.

The lithium-ion venture will be one unit, which will be Exide Energy Solutions (EES).

This investment in Exide Energy Solutions will help the company accelerate its growth in the advanced chemistry battery cell market.

The investment will also help Exide Energy Solutions to expand its production capacity and meet the growing demand for its products.

Exide has a long-term technical partnership with SVOLT Energy Technology (SVOLT), a Chinese firm, for the lithium-ion cells project.

Government's Push an Added Factor

The Indian government is actively promoting the establishment of grid-scale battery storage facilities through its massive Product Linked Incentive (PLI) scheme.

This targets the advancement of lithium-ion cells and other cutting-edge battery technologies.

Battery energy storage systems (BESS) have received significant regulatory backing in recent times.

In the latest union budget, Finance Minister Nirmala Sitharaman unveiled financial support and announced the provision of viability gap funding for BESS projects with a capacity of 4,000 MWh (megawatt hours).

BESS represents a clean, cost-effective, and sustainable alternative to conventional power generation methods, allowing for the storage and on-demand release of renewable energy.

The power ministry has estimated that it will take approximately six months for the new PLI scheme for BESS to be officially announced, with expectations of its release around December 2023.

Additionally, the government's FAME-II schemes, which offer subsidies to electric vehicle manufacturers and buyers, contributes to the growing demand for lithium-ion batteries in the country.

A Look at the Financials

Exide has strong financials, but growth has remained a challenge, especially on the bottomline front.

It seems to be at an inflection point where not only the existing business is likely to see good growth going forward but also its new initiatives.

Financial Snapshot

(Rs m, Consolidated)	FY18	FY19	FY20	FY21	FY22
Net sales	147,209	144,710	103,594	127,892	150,782
Sales growth (%)	14.90%	-1.70%	-28.40%	23.50%	17.90%
Operating profit	16,014	15,195	14,288	14,654	17,133
Operating profit margin (%)	10.90%	10.50%	13.80%	11.50%	11.40%
Net profit	8,456	7,768	8,099	43,669	8,225
Net profit margin (%)	5.70%	5.40%	7.80%	34.10%	5.50%

Conclusion

Going forward, Exide aims to expand capacity and aims to strengthen its presence in the global market.

Simultaneously, it is actively broadening its sales and distribution network to extend its reach to a wider customer base.

Exide Industries is not only dedicated to expanding its footprint but is also actively engaged in pioneering new lithium-ion battery technologies.

The company's commitment to innovation is reflected in its substantial investments in research and development.

With a strong belief in the potential for rapid growth in the Indian electric vehicle market in the coming years, Exide Industries is strategically poised to seize opportunities with its growing lithium-ion battery business.

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