Exide Industries Ltd – Leader in Batteries

India’s largest storage battery company with widest range of both conventional flooded as well as latest VRLA batteries.

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(A) About Exide Industries Ltd

Exide Industries Limited is India’s leading Battery manufacturer in India incorporated in 1947. Exide designs, manufactures, markets and sells the widest range of lead acid storage batteries in the world from 2.5Ah to 20,600Ah capacity.

Company manufactures batteries for the Automotive, Power, Telecom, Infrastructure Projects, Computer Industries, as well as for the Railways, Mining and Defense sectors.

Moreover, Company offers complete solution in areas of equipment selection, battery sizing, optimum room layout, installation, operation and maintenance.

(B) Journey Since Inception

(C) Executive Board Members of Exide industries Ltd

(i) Mr Bharat Dhirajlal Shah – Chairman & Independent Director

Mr Bharat Dhirajlal Shah is the Present chairman of the company. He is 74 years old and has extensive experience and expertise in the fields of banking, finance, and securities market.

Moreover, He has been one of the founder members of HDFC Bank Limited and has played a key role in the establishment and consistent growth of the Bank.

He holds a Bachelor’s in Science Degree from the University of Mumbai and also holds a Diploma in Applied Chemistry with special reference to metal finishing from Borough Polytechnic, London.

Before joining the company he worked with Technova, Bradma, Thomas Cook, Citibank and Pyrene in London.

(ii) Mr Rajan Biharilal Raheja – Vice Chairman & Non Executive Director

Mr R B Raheja is at the position of vice Chairman in the company. He is 68 Years old.

He finished his Bachelors in Commerce from the University of Mumbai after which he began his career in the building industry which he got from his father.

Before commencing Battery Business, He Led the Ceramic and cement Business which became successful. Moreover, He also broadened the media system with the launch of a cable corporation named Datacom Ltd and Hathway Cable.

(iii) Mr Subir Chakraborty – Managing Director

Mr Subir Chakraborty appointed as the Managing Director and Chief Executive Officer of the Company for a period of 3 years (beginning from May 01, 2021 till April 30, 2024). Mr Subir Chakraborty is a mechanical engineer from IIT, Madras and PGDM from IIM, Calcutta. He has vast experience in marketing, sales, projects and general management.

Prior to joining the Company in 1996, he was the Chief Executive Officer of MSA (India) Ltd.

Mr Subir Chakraborty received Remuneration in the FY21 was Rs 2.72 crore i.e. 0.01% of Net sales and 0.33% Net Profit

(iv) Mr Arun Mittal – Director (Automotive)

Mr Arun Mittal is 56 Years old and at the position Director of Automotive Division.

He is a Fellow member of Institute of Chartered Accountant of India, an Associate member of Institute of Cost & Works Accountants of India and Institute of Company Secretaries of India.

Additionally, He has an experience across various functions with in-depth knowledge of best practices, ability in formulating & implementing successful strategies to effect high business growth.

Mr Arun Mittal received Remuneration in the FY21 was Rs 2.23 crore i.e. 0.01% of Net sales and 0.27% Net Profit

(v) Mr Avik Kumar Roy – Director (Industrial)

Mr Avik Kumar Roy appointed as Director for Industrial Division wef May 01, 2021.

He holds a Bachelor’s of Electrical Engineering degree from Jadavpur University, Kolkata and has completed his EMBA from Asian Institute of Management, Manila.

Mr. Roy comes has 31 years of work experience as an Industrial Business Leader in reputed multinational organisations with management assignments in multiple countries and locations.

Mr Avik Kumar Roy is entitled to receive remuneration of 4 Lac per month and Commission of 1% of the Net profits.

-Family Group Structure

Rajan Raheja Group Structure

(D) Shareholding Pattern of Exide industries Ltd

Exide industries Ltd - Shareholding Pattern
Exide industries Ltd - Shareholding Pattern more than 1% Public and Promoters

(E) Product Portfolio of the company

(i) Automotive Batteries

Exide has been offering wide range of packaged power solutions in the country, which includes quality automotive batteries for both commercial and individual usage. Most of the new cars and two wheelers in India get going with their life with an Exide battery. Besides four-wheeler and two-wheeler batteries, the varied range of automotive batteries manufactured by Exide include those for heavy commercial vehicles and e-rickshaws as well.

Company’s Automotive Batteries Division Includes Batteries for all segment of 4 Wheeler, 3 Wheelers, 2 Wheelers, and for E-Rickshaws.

Moreover, Exide has also partnered with more than 75 prominent OEMs brands like Tata Motors, Maruti Suzuki, Honda, Eicher, JCB, MG Motors, Ford, Hyundai, Isuzu, Jeep, Hero, Bajaj, Mahindra and so many others.

(ii) Industrial Batteries

Under Industrial Division, Exide is a strategic partner for Many leading companies in india and accounts ~26% for Net Sales.

Its Industrial Division include a diverse Products & Application Areas of Verticals, in which Exide use to cater extensive area of Railways, Telecommunications, Solar Power & Infrastructural Projects, Traction & Motive Power.

Additionally, UPS batteries for OEMs and aftermarket service providers are the largest business drivers of the industrial division.

(iii) Submarine Batteries

Company is the high-end manufacturer of submarine Batteries comprising with the most stringent technical specifications and quality control standards. Moreover, It is one of the few battery manufacturers capable of producing submarine batteries for Russian and German marines.

Additionally, The company meets 100% demand of the Indian Navy with indigenous submarine batteries and also exports with permission of the Government of India.

Moreover Product support, technical service and proper maintenance as per technical documentation has been also provided by the company.

New Launchings

Exide Integra

On March 22, 2022 Company launched an innovative product called Exide Integra. Its an inverter system designed to give an enhanced power back-up solution in Home UPS. Exide Integra manufactured for the purpose of Automatic protection controls like overload, low battery, heat-up & short circuit.

(F) Revenue Breakup of the company

(i) Revenue segmentation of the company

Exide industries Ltd - Revenue Segmentation

(ii) Revenue mix by geography

Exide industries Ltd - Revenue Mix by Geography

(iii) Revenue mix – Institutional and Non-Institutional

Exide industries Ltd - Revenue Mix by Institutional and Non Institutional

(G) Manufacturing Facilities of the Company

(i) Manufacturing Plants

Exide’s manufacturing facilities are equipped with world’s latest and most advanced machineries.

It has total of 10 manufacturing facilities across the globe. Seven factories are dedicated to manufacturing batteries and the other two for Home UPS Systems. 

Moreover, In each of the locations, the Company has taken special measure to make small vendors an integral part of its supply chain. The key service inputs for manufacturing are sourced locally in almost all
locations.

Company procures various goods locally such as boxes, charging and small-parts manufacturing.

Exide Industries Ltd - Locations of manufacturing plants

(ii) Manufacturing Capacity

According to current Fiscal, Exide is producing an annual output of 57 Million Units/p.a of Automobile batteries (including batteries for motor-cycle applications), over 5 billion Ampere-Hours of Industrial Power yearly and has capacity in punch grid of 2.4 Million/p.a

(iii) Research and Development

Company had setup its first R&D center in year 1976, to build a company on the bedrock of innovation.

A group of ~90 engineers and scientists are with the company in R&D division which engaged in bringing out new products, improving upon the existing technology and workings.

Apart From that, Exide’s R&D Team is working on developing “Bipolars Lead Acid Batteries” which could give a better performance (in mainly low speed electric 2 wheelers) then other Lead acid chemistries and Lithium ion batteries.

The Company Believe, “Bipolars” technology will be a key changer in upcoming years.

In FY21, a total of Rs 20.02 Cr has been incurred on R&D, which is 0.20% of Net Sales.

(iv) Nexcharge – a JV between Exide Industries Limited and Leclanché, Switzerland

Nexcharge is a state-of-the-art Research & Development facility and its expertise in battery design, it is capable of offering battery design services, cell testing and performance validation, electronics and firmware development, mechanical and thermal design and software development.

Moreover, Its posses india Largest lithium-Ion Batteries Pack factory, which is spread across 6 lac sq feet of Land in which 1 Lac sq feet is already build up.

Above all that, It manufactures batteries keeping in mind to suite typically all whether conditions.

(H) Cost structure of the company

(i) As % of Net Sales

Exide Industries Ltd - Cost Structure as % of Net Sales

(ii) Raw Material consumed as % Net Sales

Exide Industries Ltd - Raw material Consumed as % of Net Sales

In FY21, Exide’s Raw material Consumption reduced from 45.76% to 43.72%.

Raw material prices were normal during the initial months of FY21, but the second half of year saw significant increase in shipping and freight charges.

Furthermore, Lead is the main Raw Material for the company.

Moreover, 40% of Lead and Alloy Lead raw Material meet from recycled Lead units.

(iii) Advertisement & Sales Promotion expense as % of Net Sales

Exide Industries Ltd - Advertisement and Sales promotion expense

Over The past 10 Years, Company’s Consistently spending on Advertisement & Sales promotion to gain the market share and to build a robust brand Visibility.

(I) Peers of the company

Exide Industries Ltd - Peers or competitors

Amara Raja and Exide each have similar percentage of market share in India of around 30%. In the battery market in India, 60%-65% of the market share is of the organized players and the 35%-40% is of the unorganized players.

Over the years, many new players entered in the battery manufacturing industry like TDS Lithium-Ion Battery Gujarat Private Ltd.

Additionally, India currently imports battery storage equipment worth Rs.20,000 crore. Companies like Reliance Industries, L&T, Exide, Amara Raja, Lucas TVS, Mahindra and Mahindra, and Ola are looking at setting up ACC battery storage manufacturing in India.

(J) Market Share

Exide Industries Ltd - Market Leadership

Exide is having the 60% market share in Automobile Batteries and 86% in 2 Wheeler which means it will be the direct beneficiary from any structural change in the auto demand owing to its leadership position.

Moreover, Exide Industries is one of the prominent brands that supply submains batteries to Russian and German marines.

(J) Financial Parameters

Exide Industries Ltd - Financial parameters
  • Exide Industries ltd recorded positive Net Sales growth in the FY21 of 6% but negative in FY20 of 2%. 
  • Also, Over the 10 Years, Exide Industries ltd has delivered 12% CAGR of Net Sales and 6% CAGR of Profit after tax (PAT).
  • Company is able to maintain enough cash balance.
  • Whereas, its debt to equity increased in FY21 by 0.01%.

(K) Management and Discussion Highlights

(i) Sale of Exide Life Insurance Business

During FY22, Company has planned to sell its Exide Life Insurance Business to HDFC Life for an aggregate consideration of ₹6,687 crore. The company will get ₹730 crore in upfront cash and the rest will be kept in HDFC Life stock worth ₹5,960 crore. However, Exide could use the funds for its much-awaited investments in lithium-ion battery manufacturing facilities.

The acquisition is expected to be completed before June 30, 2022.

(ii) Joint Venture

Recently, Exide did a technical joint venture with Switzerland’s Leclanche to manufacture lithium-ion batteries in Gujarat for electric vehicles. It is on the commencement stage. Meanwhile, company has increased its stake from 80.15% to 82.71% in April 2021 for a total consideration of 40 cr.

(iii) Nexcharge

Exide’s Nexcharge is under development, focusing on manufacturing of special types of batteries which can abide all whether conditions such as high humidity, high temperature and rainy climate. Also, company believes such batteries will extended the life atleast to 10 Years.

(iv) Other Updates

  • Additionally, with its Brazilian Partner “Moura” Exide is developing batteries for micro and Hybrid car modules. Micro & Hybrid Cars Know as Idle start and stop cars, is gaining good acceptance in Indian markets.
  • Currently, this type of Batteries are being evaluated by only European Car manufacturers.
  • Company is working on an Opportunity Rapid Charge or ORC battery for specific application areas such as airports.
  • Moreover, company also focuses on expanding its distributor base, introducing new products and new technologies and investing in brand-building activities.

-Concalls Highlights

  • During Q3FY22, Company posted a revenue de-growth of 3% QoQ of Rs 3197 crore.
  • EBITDA has been reported in at Rs 373 crore having the margins at 11.7%, (Down 0.9% from Previous quarters)
  • In Q3FY22, The PAT of the company was at Rs 204 crore. however from previous quarter PAT plunged ~13%.
  • In Q3FY22, The gross Margin of the company contracted by almost 1.70% due to Raw Material cost, Fuel and Freight cost. For instance, The company took a 7–9% prices hike in 9MFY22 to offset the cost inflation.
  • Automotive vertical’s Volumes have grown over the last year, largely driven by demand recovery in the Replacement market.
  • Also, The Demand for Industrial UPS remains high as the pickup in commercial activity has led to an increase in orders from offices and industries.
  • Exide took multiple initiatives in the past few quarters which should drive sales and help improve performance. Currently, as an ongoing focus area, sales transformation and cost compression remain the core strategies to improve efficiencies within the company.

(L) Strength and Weakness

(i) Strengths

a. Well Market position in the automobile batteries market

Exide is the market leader in the domestic automobile battery industry, both in the OEM as well as in the replacement battery space.

The company’s long presence in the industry, its brand building initiatives coupled with its product quality provided EIL with a strong position in the industry.

b. Multiple end-user industries

Exide Industries ltd sells its batteries to a large customer pool, spanning across the automobile and industrial battery segments.

Furthermore, its industrial battery customers are primarily from sectors like power, railways, telecom, solar projects, etc.

Exide’s most of the end-user industries are cyclical in nature and, hence, are exposed to business downturns, but EIL’s diversified user base mitigates demand risks to some extent.

Further, its JV with Leclanche Switzerland diversified its presence by entering into the domestic lithium-ion battery segment as well.

(ii) Weakness

a. Intense competition from organised and unorganised players

Exide’s business margins have been under pressure because of intense competition in the industrial battery segment and emergence of new players in the auto segment in recent years.

However, the company has maintained stable operating margins and pass on the price escalation to its customers.

b. Hazardous nature of lead-recycling operations

Lead, a highly toxic and polluting material, is the primary raw material for manufacturing batteries. Hence, handling lead requires adherence to pollution control norms and EIL has to incur additional costs for managing the environmental impacts of the material.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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