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Informist, Friday, Dec. 20, 2024

 

--Sources: Exide ups planned invest in lithium-ion cell plant by INR 10 bln

--Sources: Exide to invest INR 50 bln in lithium-ion cell plant in phase 1

--CONTEXT: Exide planned INR 40-bln invest in Sept 2022 for lithium-ion plant

--Sources: Exide to partly fund extra invest in lithum-ion unit via bk loans

--Sources: Exide ups planned capex in lithium-ion unit on high input costs

 

By Avishek Rakshit

 

KOLKATA – Exide Industries Ltd. is set to exceed its planned investment of INR 40 billion in its upcoming lithium-ion cell manufacturing plant in Karnataka by INR 10 billion, which could lead the hitherto debt-free company into taking some amount of bridge loans to fund the project, sources told Informist. The company now plans to invest INR 50 billion in the plant as it seeks to foray into the fast-growing lithium-ion cell manufacturing. 

 

After investing over INR 31.5 billion so far since Sept. 2022 to set up the plant, Exide will spend another INR 18.5 billion to complete the first phase of the project, sources said. The plant, once operational, will initially have a lithium-ion battery production capacity of 6 gigawatt-hours. Most of the investment will be completed by March 2025, and there could be some spillovers in the next financial year, sources said. The plant is expected to begin lithium-ion battery production by mid-2025.

 

The upward revision in the planned investment comes on the back of a rise in machinery import costs, and costs related to building the plant, people familiar with the development said.

 

Exide, however, refused to comment on the matter. 

 

Most of the investment is likely to happen through equity infusion in Exide Energy Solutions Ltd., its wholly owned subsidiary which is building the plant and handling Exide's lithium-ion battery business. "Most of the funding is set to come from internal accruals as the case has been for so long with Exide. However, there can be a requirement to take some bridge loans to fund the project," one of the sources said. 

 

Exide is yet to narrow down upon the quantum of the bridge loan, and the bank interest is yet to be negotiated, sources said. According to Exide, rating agency ICRA Ltd. has rated its commercial papers as 'A1+', and fund-based and non-fund-based facilities are rated 'AAA'.

 

In case Exide opts to take a loan, it will be the first time in over a decade that the battery maker will have to borrow from banks, which may result in a debt hangover in the coming years to fund its capital investment. In 2023-24 (Apr-Mar), Exide's cash flow from operations was close to INR 20 billion, and during Apr-Sept of FY25, it was a little over INR 7 billion. 

 

Exide also received INR 66.9 billion from HDFC Life Insurance Co. Ltd. in 2022, when it sold its insurance business to the HDFC Group company. Of this amount, Exide received INR 7.3 billion as cash payout. 

 

"The bridge loan is needed as Exide will not be able to immediately match the quantum of cash outflow from its accruals. There is volatility in the lithium market and such factors will have to be considered when making such huge investments," one of the sources said.

Based on the offtake and the sales performance, once Exide starts rolling out lithium-ion batteries from the plant, the company will double the capacity by another 6 gigawatt hours at a later date, which at current estimates could see India's largest car battery maker pumping in another INR 20 billion for the brownfield project. The batteries will be used in electric vehicles and in power storage solutions. 

 

Even as Exide has silently increased its capital expenditure, its partner for the lithium-ion venture, China-based SVOLT Energy Technology Co., Ltd. has not earmarked any capital outlay for the plant. Its role is mostly limited to giving Exide the requisite technology to make lithium-ion batteries and in helping to procure raw materials once the plant begins production. 

 

At 1343 IST, shares of Exide Industries traded 0.8% down at INR 436.20 on the National Stock Exchange.  End
 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

 

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