EXIDEINDNSEQ2 FY23November 16, 2022

Exide Industries Limited

7,590words
111turns
10analyst exchanges
5executives
Management on call
Subir Chakraborty
MANAGING DIRECTOR AND
Asish Kumar Mukherjee
DIRECTOR,
Jitendra Kumar
PRESIDENT, LEGAL AND
Chhavi Agarwal
HEAD OF INVESTOR
Aditya Jhawar
INVESTEC CAPITAL
Key numbers — 30 extracted
rs,
lders for the continuous support and trust they have shown in Exide. If I look at the last few years, we at Exide have been continuously working to be more agile, innovative, efficient and technologic
13%
inflow. Coming to financial performance, I believe it was a very good quarter for us. We clocked 13% year-on-year growth in sales in Q2 FY '23, and EBITDA was similar to last year in absolute term
32%
rst half of the year, our performance is very healthy with sales and profit before tax growing at 32% each. Our effective cost optimization initiatives has helped us lower our fixed costs. Total fixe
19.4%
tive cost optimization initiatives has helped us lower our fixed costs. Total fixed expenses were 19.4% and 18.7%, respectively, of sales in Q2 FY '23 and H1 FY '23, down from 20.2% in Q2 FY '22 and 20
18.7%
optimization initiatives has helped us lower our fixed costs. Total fixed expenses were 19.4% and 18.7%, respectively, of sales in Q2 FY '23 and H1 FY '23, down from 20.2% in Q2 FY '22 and 20.5% in H1
20.2%
fixed expenses were 19.4% and 18.7%, respectively, of sales in Q2 FY '23 and H1 FY '23, down from 20.2% in Q2 FY '22 and 20.5% in H1 FY '22. One area which I would like to highlight is digitalization i
20.5%
4% and 18.7%, respectively, of sales in Q2 FY '23 and H1 FY '23, down from 20.2% in Q2 FY '22 and 20.5% in H1 FY '22. One area which I would like to highlight is digitalization initiatives taken across
Rs. 1,007 crore
quity and a high liquidity position. Moving on to the first half cash flow, the company generated Rs. 1,007 crores of cash flow from operations. Our profit, along with prudent working capital management support
INR 6,000 crore
P, Start Of Production sometime in 2024. So that is the plan. The overall capex for this plant is INR 6,000 crores, of which around INR 4,000 crores will be spent for Phase I and the balance for Phase II. Jine
INR 4,000 crore
2024. So that is the plan. The overall capex for this plant is INR 6,000 crores, of which around INR 4,000 crores will be spent for Phase I and the balance for Phase II. Jinesh Gandhi: And when we start Pha
14%
us a consolidation in the industry? And do you expect normalized margins to again go back to that 14%-15% range from where we are today? I understand RM cost has gone up, but in the replacement marke
15%
consolidation in the industry? And do you expect normalized margins to again go back to that 14%-15% range from where we are today? I understand RM cost has gone up, but in the replacement market, I
Advertisement
Guidance — 20 items
Subir Chakraborty
opening
“These initiatives have enabled us to deepen our customer engagement and make our sales force more efficient and target oriented.”
Subir Chakraborty
opening
“While we expect overall demand to be healthy, any external factor of geopolitical tensions and impact the demand and the supply side situation in the sectors in which we cater.”
Subir Chakraborty
opening
“We further expect sequential margin recovery to continue, supported by some respite in input costs.”
Subir Chakraborty
opening
“We have recently done the Bhumi Pujan ceremony on our project facility in Bangaluru Airport, and all necessary approvals are underway.”
Subir Chakraborty
opening
“Our senior management team, hiring is almost complete, and we are on track to complete the first phase within earlier proposed timelines.”
Jinesh Gandhi
qa
“So, can you talk more about it with respect to what will be the initial capacity which we start with and the ramp-up timeline?”
Jinesh Gandhi
qa
“And effective capex for the same for, which will be incurred in FY '23 and FY '24 for cell manufacturing plant?”
Subir Chakraborty
qa
“So, we expect the Phase I, SOP, Start Of Production sometime in 2024.”
Subir Chakraborty
qa
“The overall capex for this plant is INR 6,000 crores, of which around INR 4,000 crores will be spent for Phase I and the balance for Phase II.”
Subir Chakraborty
qa
“The answer is yes, because we expect that we would be one of the first players to kick start a multi-gigawatt hour, lithium-ion facility in the country.”
Risks & concerns — 8 flagged
So, it is difficult to quantify, but it is approximately, it will be around INR 400 crores to INR 400- INR 500 crores per year.
— Siddhartha
And sir, for this quarter, if we see sequential growth in terms of revenue, so we reported close to 3% decline compared to one of our competitors, which reported growth in sales Q-on-Q.
— Subham Agarwal
So sequential growth in terms of revenue, we reported a decline compared to Q1.
— Subham Agarwal
The home UPS battery is actually in the second quarter, they always show a decline.
— Subir Chakraborty
Sir, now coming to the Exide Energy Solutions subsidiary, so, in our lithium-ion project, what as per you is the biggest challenge for executing this project because we are going through a technological transformation.
— Subham Agarwal
And getting into cell manufacturer was too big a risk, at that point in time.
— Subir Chakraborty
Number two is the major challenge here is to actually stabilize production.
— Subir Chakraborty
See, as I told you, this concern has basically stemmed out of what.
— Subir Chakraborty
Advertisement
Q&A — 10 exchanges
Q
My question pertains to the cell manufacturing capacity which you're putting up. So, can you talk more about it with respect to what will be the initial capacity which we start with and the ramp-up timeline? And effective capex for the same for, which will be incurred in FY '23 and FY '24 for cell manufacturing plant?
Subir Chakraborty
So, thank you for your questions. So, the plant is being setup on roughly 80 acres of land, and it is being conceptualized in two phases, Phase I and Phase II. So, in Phase I, we will have 6- gigawatt hour of capacity in Phase II, another 6-gigawatt hour of capacity. So, we expect the Phase I, SOP, Start Of Production sometime in 2024. So that is the plan. The overall capex for this plant is INR 6,000 crores, of which around INR 4,000 crores will be spent for Phase I and the balance for Phase II. And when we start Phase I, it will start directly with 6-gigawatt hour capacity or... Yes. And any
Q
Sir, again, the first question on your lithium-ion plans. So, on the customer side, will it be possible to guide us like which segments you are essentially targeting in the first phase, like 2- wheeler customers, 3-wheelers or the cars. Some broad segment indication will be very helpful?
Subir Chakraborty
So, we are targeting all customers. As you know, in lead-acid space, we have a very wide product portfolio. Similarly, also in lithium-ion space, we are targeting 2-wheelers, 4-wheelers, e-rickshaws, stationary applications, all customers. And the capex, how do you plan to fund it? Will it be through the investments we have in shares or... I am requesting our CFO, Mr. A. K. Mukherjee to answer that question. Asish Kumar Mukherjee: So, the capex, you mean for the core business or for the lithium-ion? For the lithium-ion capex of INR 6,000 crores. Asish Kumar Mukherjee: So, lithium-ion in the Ph
Q
So, in this quarter, we have grown almost 13% Y-o-Y. Can you provide break up volume and growth to this?
Subir Chakraborty
See, basically, it has been a double digit. We do not actually quantify exact segment-wise figures, but it has been a double-digit growth in both volume and value. But the overall sales of 13% only and there is a lead inflation and other inflation as well, then volume growth, I mean OEM has done very well. We know that from the market. But then is it really that you don't double digit across all segments in the volume side? Not very clear, if you can just say again? Ashutosh Tiwari No, if I look at, there is a 13% growth overall in sales and there is a lead inflation as well versus last year.
Q
Yes. Thank you for the opportunity. Sir, firstly, I wanted to understand for our base business, what is our current capacity utilization?
Subir Chakraborty
Current asset utilization. Yes. Capacity, we are clocking anything between 85% to 90% at this point in time. And sir, for this quarter, if we see sequential growth in terms of revenue, so we reported close to 3% decline compared to one of our competitors, which reported growth in sales Q-on-Q. And earlier in the call, you mentioned that we have been gaining market share. So, can you briefly explain what is the reason for this? Can you repeat the question, please? Yes. So sequential growth in terms of revenue, we reported a decline compared to Q1. And if we compare this, to one of the listed pl
Q
Sir, my question is that in our lithium-ion cell manufacturing facility, what is our plan to scale up the manufacturing to in terms of more value-added things in terms of supplying modules, supplying battery management system? I believe that it could also have a bearing on overall margin profile of this entity? And what is our target margin - EBITDA margin that we are looking at from this facility?
Subir Chakraborty
So, as we have already declared, it's a multi chemistry and multi-format plant. So initially, we are looking at NCM and lithium-ion phosphate, so these two technologies. And in terms of format, we have the cylindrical cells, we have a prismatic cell, and we have also envisage, grade at some point in time. So, it is the largest possible prospection of product variant that one can think of, which we are planning for this plant. So, scaling up, depending on the, first initially, it will be 6-gigawatt hour and then another 6- gigawatt hour. And then from then on, depending on the demand and how th
Q
So basically, with regard to your Nexcharge, now you're buying out the entire stake of your partners, will there be a commitment to supply or source sales or whatever future requirement for your plant going forward from the partner? Or we will be on your own to find it out and chase it as you go forward?
Management
We have absorbed all the technology already and so, there is no issue actually. And we were not sourcing any cell from there. They don't have -- they are a very small plant, in fact, the 250- megawatt hour plant. And their cells are not cost competitive as far as India is concerned. So, we are not sourcing anything from there in any case. We already absorbed the technology. And do you see still scope to have different assembly plants, one in for Nexcharge and the other one in Bangalore? Or it might make sense to consolidate everything that you want to do and get a scale benefit? Subir Chakrabo
Q
My first question is on the export side related to lead acid batteries. Your share of exports has been rising over the past few years. So just wanted to understand what your aspirations in these markets? And could this be an opportunity for pricing an ESP improvement?
Subir Chakraborty
These exports presents a very big opportunity for us because our products are accepted now all over the world. We are exporting to 60 countries globally. And to the first world in terms of one of our largest markets is Europe, US, the MECA region, Southeast Asia. So, we are fairly well spread out. And in certain product categories like traction cells, we are the vendor of choice by the largest forklift manufacturer in Germany. So, we are very well placed in this and we are growing rapidly. And we see good prospects going ahead. And just a follow-up here. We have heard that EVs also have an aux
Q
My first question is regarding your investments on the EV side. Can you just help us understand what the kind of workforce we have, which is dedicated to the lithium-ion project and for how long we've been having the lithium cell lab in-house in the company because that's again quite important. So, if you can just help us understand this to begin with.
Subir Chakraborty
How many people. So, people, we have started taking -- we have already completed the top- tier recruitment as I said earlier, N-1, N-2 recruitments are in place. So, the team is working out of a next shift office in Bangalore, soon as soon as the offices – the office space is ready in our site, they will move there. So, we have very qualified people working -- already we have started to work there. Yes, we are in a way in the buildup space on the R&D side on the on the EV -- for the lithium battery project. Yes. So, have got, for example, we recruited our CTO. So, she is building the R&D this
Q
Yes. I have just one question. Is it possible to share the technical collaboration agreement terms with SVOLT that we have? Again, you said they're going to help us set up the plant and also stabilize production in the initial phase. So are we -- the fee or the consultancy charges or like the collaboration amount that there will be agreed. Is it a percentage of sales or a fixed like revenue to be paid to them? And over what period that will be really helpful.
Subir Chakraborty
So, to answer your question briefly, it is not possible for us to divulge he exact details of an agreement, because it would reach the confidentiality clause. But overall, I can tell you, it is a standard technology license agreement where there is an upfront payment and there is a royalty payout. It is nothing out of the ordinary.
Q
Thank you. I hope we have been able to answer all your questions satisfactorily. If you have any further questions or would like to know more about the company, we would be happy to give your assistance. Thank you.
Management
Speaking time
Subir Chakraborty
41
Moderator
12
Siddhartha
11
Jinesh Gandhi
8
Asish Mukherjee
8
Ashutosh Tiwari
6
Pramod Kumar
6
Subham Agarwal
5
Aditya Jhawar
4
Pramod Amthe
3
Advertisement
Opening remarks
Aditya Jhawar
Thank you. Good afternoon to you all. From Exide Industries we have with us today- MD and CEO, Mr. Subir Chakraborty; Director Finance and CFO, Mr. Asish Kumar Mukherjee; President, Legal and Company Secretary, Mr. Jitendra Kumar; and Head -Investor Relations, Ms. Chhavi Agarwal. Before we proceed, here is a disclaimer for the call, a few statements made by the management in the call may be forward-looking, and we request you to refer to the disclaimer in the press release or further details. We will start the call with a brief-opening remarks from the management followed by a Q&A session. I would now like to invite Mr. Subir Chakraborty for the opening remarks. Thank you. Over to you, sir.
Subir Chakraborty
Thank you, Aditya. Good afternoon, everyone, and a warm welcome to the call. Hope you all are doing very well. Firstly, I would like to thank all our stakeholders for the continuous support and trust they have shown in Exide. If I look at the last few years, we at Exide have been continuously working to be more agile, innovative, efficient and technologically advanced. And this is reflected in our resilient business model and our future-ready products portfolio. We continue to be a leading player in the lead-acid battery space and are always focused on delivering profitable growth. Looking at the previous quarter, I will start by talking about the demand scenario. Overall, demand was upbeat in most of the sectors to which we cater. On the automotive side, the replacement market continues to grow, and demand from OEMs started recovering as the semiconductor supply situation improved. In the Industrial division, overall pick-up in business activity and increase in capex by public and pri
Advertisement
← All transcriptsEXIDEIND stock page →