Exide Industries Ltd
NSE:EXIDEIND
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
283.3
579.65
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Exide Industries Ltd
You don't have any saved screeners yet
Good day, ladies and gentlemen, and welcome to the Q2 FY '23 Earnings Conference Call of Exide Industries Limited. [Operator Instructions] I will now hand the conference over to Mr. Aditya Jhawar from Investec Capital. Thank you, and over to you, sir.
Thank you. Good afternoon to you all. From excite industries we have with us today, MD and CEO, Mr. Subir Chakraborty; Director, Finance and CFO; Mr. Asish Mukherjee; President, Legal and Company Secretary, Mr. Jitendra Kumar; and Head of Investor Relations, Chavvi Agrwal. Before we proceed here as 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 on the management followed by a Q&A session. I would now like to invite Mr. Subir Chakrabortiy for the opening remarks. Thank you. Over to you, sir.
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 their continuous support and trust they have shown in next slide. 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 for [indiscernible]. 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 private sectors led to good order inflow. Coming to financial performance, I believe it was a very good quarter for us. We dropped 13% year-on-year growth in sales in quarter 2 FY '23, and EBITDA was similar to last year in absolute terms despite high input cost inflation. Although margins were impacted on a year-on-year basis, we have reported a sequential improvement in the margins in the quarter as high raw material prices started softening. For the first 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 operate cost. Total fixed expenses were 19.4% and 18.7%, respectively, of sales in quarter 2 FY '23 and H1 FY '20, down from 20.2% in quarter 2 FY '22 and 20.5% in H1 FY '22. One area which I would like to highlight is digitalization initiatives taken across operations. Our digital journey began 2 years ago, and so far, digital processes have infiltrated various critical departments, including sales and customer service, supply chain and human resources, among others. These initiatives have enabled us to deepen our customer engagement and make our sales force more efficient and target oriented. Our supply chain costs have lowered, and accuracy has increased significantly. We continue to maintain a very strong balance sheet with 0 debt, equity and a high liquidity position. Moving on to the first half cash flow, the company generated INR 1,007 crores INR 107 crores of cash flow from operations. Our profit, along with prudent working capital management support our cash flow. We have a very strong financial base, which I believe is extremely critical. This will not only enable us to capitalize on opportunity but will enable us to live through tough times in the [indiscernible]. Talking about the near term, though we are optimistic, we are also carefully evaluating various scenarios at the same time. While we expect overall demand to be healthy, any external factor of political tensions and impact the demand and the supply price situation in the sectors in which we take. We expect -- we further expect sequential margin recovery to continue, supported by some respite in input costs. However, I'd like to mention that raw material costs have again started increasing. Moving on to the retinal manufacturing plant, which we are setting up under our wholly owned subsidiary, Exide Energy Solutions Limited. We have recently done the Bhumi Pujan ceremony on our project [indiscernible] Bangalore Airport, and all necessary approvals are underway. Our senior management team, hiring is almost complete, and we are on track to complete the purchase in earlier proposed time lines. This concludes our update for the quarter and half year. With this, I close our opening remarks, we'll now be happy to take your questions.
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment while question and -- we have the first question from the line of Jinesh Gandhi from Motilal Oswal Financial Services.
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 time line? And [indiscernible] CapEx for the same for -- which will be incurred in FY '23 and '24 for cell manufacturing plant?
So, thank you for your questions. So, the plant is being set-up on roughly 80 acres of land, and it is being conceptualized in 2 phases, Phase 1 and Phase 2. So, in Phase 1, we will ask gigawatt hour of capacity in Phase 2, another 6 gigawatt hour of capacity. So, we expect the Phase 1 SOP start-up production sometime in 2024. So that is the plan. The overall CapEx for this brand is INR 6,000 crores, of which around INR 4,000 crores will be spent for Phase 1 and the balance for Phase2.
Okay. And when we start Phase 1, it will start directly with 6 gigawatt or capacity or...
Yes.
Okay. And any indication on the kind of interest which you're getting for the 6 giga capacity, given that we'll be starting in '24. So have you started getting RFQs or interest on potential customers.
The answer is yes, because we expect that we would be one of the first players to kick start a multi-working facility in the country. And this has generated a huge amount of interest amongst all the OEMs and other players. And we already have started to do a reach-out exercise with potential customers who are well known to us because we have been in this market for 35 years is there has been battery for the customers. We have deep customer connects. And we are well placed to service their requirements.
Got it. And assuming demand is not a constraint, how soon can we reach to 6 gigawatt out of manufacturing? What I'm trying to understand is how is the ramp-up time lines for such capacity given that it will be the first in the country. How long does it take to run the full capacity that way?
See we expect, as I said, SOP sometime in 2024, expectedly now in the third quarter or so third fourth quarter around that time. So – so, actual risk first phase, full-scale production that you are asking, this will get stabilized, I expect towards the absolute latter half of 23, 24. -- sorry, 24, 25, and the stabilization of this process will happen in '25, '26.
Okay. Got it. Got it. And second question pertains to our core business of units in batteries. So have we seen over last few years, 2, 3 years, increasing share of organized players and for side as well and the replacement market side.
Sorry, I could not get your question.
Has market share of organized players and it has gone up in the last 2, 3 years in salience of unorganized has it come down in that time frame or it has been truly stable over the last 2, 3 years? The organized sector, I would imagine we have gained share, but excise has been gaining share rapidly in the market, not only against unorganized me, but also against organized states in almost all sent.
Okay. if I look at our margins, both on gross and EBITDA side and that for our peers, -- over the last few years, they have been coming down despite increasing consolidation in the industry. So how do you read that margin evolution versus 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 market, I believe we have a good pricing power. So, in that context, you can share your thoughts.
A question is on a related basis or on an absolute basis. Basis on an absolute basis, I can tell you that we have seen an environment where raw material costs have continuously gone up. In fact, there has been no increasing phenomenon across all raw materials, not only lead separators, everything, plastics. So, in certain environment, what happens is that you, of course, do your price increases. But then the price increases are based on past data, which means that, let's say, you do a price increase in this month, obviously, you take factoring the cost of the last 3 months or 6 months and so on. But then in a situation of monotonic price increase, which has happened by the time you may take the price increase or adjust the prices, the raw material costs have pushed up again. So again, you need to take a subsequent price increase. So, this has been the phenomenon in the last 2 years because of non-stability of the raw material price. So, while we have adjusted prices, but there has been a time lag. Now your question as to when we can go back to that 14%. The answer is quite simple. Once the price is stabilized, it will take about 3 to 6 months for the situation to actually come to a steady state level. And from then on, the earlier margin should be possible.
Got it. Excellent okay thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to answer questions from all participants. I question please limit your questions to 2 per participants. Should you have a follow-up question please rejoin the queue. We have the next question from the line of Kapil Singh from Nomura Group.
Yes. Sir, again, the first question on your lithium and plans. So, on the customer side, would 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.
So, we are targeting all customers. As you know, in leased space, we have a very wide product portfolio. Similarly, also in tin space, we are targeting 2-wheelers, 4-wheelers, [indiscernible] stationary applications, all customers.
Okay. 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. okay to answer that question. So, the CapEx, you mean for the core business or for the MI. For the lithium to INR 6,000 crores.
So, Lithia man in the Phase 1, there will be 2 phases, of course. The first one would be approximately INR 4,000 crores. And Phase 2 will be another 2,000. So properly as of now estimated at around INR 6,000 crores.
Yes. But in terms of the funding, sir, if you can help us with that? Financing, it will be largely from internal accruals from equity infusion. I mean, from excise. And whenever we require earnings bridge financing to the borrowed funds will require -- we'll take it from banks, et cetera.
Okay. No, I mean that we have an GFC-like as an investment in, would we look to monetize that opportunity for this? Or what internal accruals for me?
See... As I said that it will be largely from internal accruals only. So we really don't need the HDFC Life asset for this investment. So, in any case, there will be a lot of investment requirement in future also. So as of now, there is no such plan in monetizing this.
And the base net asset business, how much CapEx should we assume there to be there everywhere now?
[indiscernible], of course, we will not compromise any CapEx requirement for the core business as well. So, it is difficult to quantify, but it is approximately, it will be around INR 200 crores to INR 400 crores to INR 500 crores per year.
Okay. Got it -- and then on the base business, sir, if you can highlight for the quarter in terms of growth for PO and industrial, how was our growth in these segments? And what is the outlook for the rest of the year is possible?
We have grown very handsomely as we are seeing. There is a 32% growth in sales and 32% growth in PBT as well -- so there is very robust demand across all segments. And we are taking advantage of that situation. We don't see any lack of demand in lead acid rate as of now. In fact, as you may have seen all the many -- I will not say all -- many of our customers who are manufacturing 4-wheelers and so on, they are earmarked CapEx for the traditional internal combustion engine kind of technology. So, there is good growth happening in the traditional space, and we are well poised to take advantage of that situation.
Any -- would it be possible to share the capacity currently in tubular and 4-wheeler battery and industrial? And any expansion you are planning to take in any of these to...
See, we have right now adequate capacity to take care of our requirements. Our capacities and so on are mentioned in our annual report, so you can take a look at it.
Okay. And the expansion, sir, any particular areas on to spend on.
Expansion... Right now, we have adequate capacity to take care of the present requirements. However, there are areas where we need to look at fine-tuning the product portfolio or to introduce some new products and on and purpose. So therefore, we require CapEx. But right now, we are not planning any greenfield facility. Whatever is happening is on an incremental basis on brownfield basis.
Okay. [indiscernible], sir, that is the last question.
Quantify what?
Quantify the expansion, which you are planning to take? These are, as I said, brownfield expansions, capacity unlocking or dewatering those kinds of activities are going on.
We have the next question from the line of Ashutosh Tiwari from Equirus Securities.
So, in this quarter, we have grown almost 13% Y-o-Y. Can you break up volume and growth to this?
See, basically, it has been a double digit. We do not actually quantify exact segment-wide figure, but it has been a double-digit growth in both volume and value. But at the overall sales of 13% only -- and there is a lead inflation or the 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 it across all segments in the volume side?
Not very clear, if you can just... No, if I look at a 13% growth overall in sales and there is a lead inflation as well was, say, last year. So, if we are growing double digit in terms of volume and probably valuable hardly 3%, which appears to be lower because we have taken multiple price increases over the last 1 year. So, can you quantify? I mean, industrials or maybe order broadly, what kind of volume growth you are seeing?
So, there are -- there is no uniform volume growth in all segments. There are a few segments where up and few segments were down. So overall, if you see the volume, then it will be close to double digits. And -- but there are pluses and minus in different segments.
Okay. And secondly, on this next charge your subsidiary, have we done any sales from there this quarter? And basically, how much of your sales from there? And these segments are gating to up now from that next charge?
See, next year, production has just started. So,it will take some time for it to stabilize. As you know, the next charge facility does not manufacture sales. It imports sales and make modules and packs. So that effort has just started. And as you may have seen in our declaration very lately, that unit has become 100% subsidiary of Exide now. And so, I think going forward, this -- once this production stabilizes, then things will move forward at a faster pace.
But as of now, in terms of development work that we already completed which segments of product basically we're going to launch from there?
See, we have launched products for buses, and we have long products for the telecom sector and also for 2-wheelers. But as I was telling you, these are not with our sales.
Yes, that I know we have to import sales and to make rate back.
This unit, the full leveraging of it will only be possible or will be realized once we start manufacturing our own selves. This is something which we have done earlier in order to understand the market and understand the lithium and technology and the rest of it. So that was the objective of this exercise.
Okay. And lastly, we had done INR 612 crores CapEx in the first half in consolidated basically. So, can you provide a breakup up same in terms of latest obviously, will be part of standalone, which is around INR 150 crores, but remaining is what exactly? Is it Betanplant or your latest meeting, what is the CapEx numbers? CapEx in the first half is about INR 160 crores -- INR 56 or so for core business. And we are saying INR 600 crores. I'm not sure we...
Consented number. consolidated balance, if I look at the cash flow statement, beIN12 crores CapEx in the first half, consoling...
That's why we include our investment in the ESS that new vitamin sales...
So, I just want to take up of that, is it the meaning of like 61 banks, 160 completely that?
Yes. No, it's primarily on account of land and...
Okay. Thank you very much.
Thank you. We have the next question from the line of Shubha Makara from Equitas Investments.
Yes. Thank you for the opportunity. Sir, firstly, I wanted to understand for our base business, what is our current capacity utilization?
Current asset utilization. Yes.
Capacity utilization, yes. Capacity. Capacity, we are clocking anything between 85% to 90% at this point.
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 players in similar space, they reported a growth Q-on-Q. So, what is the key reason for such...
I'll explain. The sales composition, our sales composition is not exactly identical to the sales composition of our competition. We are, for example, very heavily into the inverter batteries or the home retail vaccines. The whole vets actually in the second quarter, they always show a decline. So traditionally, it is second quarter -- first quarter is always much better than the second quarter because of the composition of the kind of sales that have -- so this has nothing to do with gain or loss of market share, gain a lot of market share that I'm referring to is in the vehicular space or in the 2-wheeler space and so on and so forth, that those are the areas where there has been growth in market share. But the HP tagline is so heavily skewed that it makes a difference be on the quarter 1 and quarter 2. And all along, if you look at our results, it will show the same kind of change.
Fair enough. 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. So, what are the key areas that you are facing challenges and how you are addressing...
See, the challenges are basically, of course, we are state's a new technology, but we have taken adequate safeguards in terms of, see, you have to understand one thing that many people asked us that you have invested in this next charge, then again, you have invested here. You have to understand the flow of logic, which is precisely this that 3, 4 years back when people were talking about lithium ion, we discussed and we waited and decided that the best way to actually wet our feet is to get into it. And getting into cell manufacturer was 2 bigger risk, at that point in time. So, we decided we'll get into module and pack met, which is why we invested in this company in this unit because it was a good way to understand this technology because once you start doing modules and pack, first of all, you understand what it takes to make modules impact. And secondly, we also have discussions when we sell manufacturers, and we understand about cell manufacturing as well. So, this was really a kind of initial step, which we took. And after that 3-, 4-year phase, unfortunately, those years were also marked with strengthening. So, it slowed us down. But today, we have a very good understanding of what it takes to manufacture with and sell. It is not the same case with the other players who are today trying to get into this space because let me tell you, modules and pack-making technology, it looks very simple, which is why you have so many units who are using Sellotape to die to make these modules unpacked and you know the end result of what is happening in the marketplace because of in conceived modules and packs. So, if you ever visit this plant, you will see how sophisticated a plant can be in terms of climate control, in terms of robotics. So it's a fully automated plant. So, it took us trying to understand this because in India, you don't have this kind of experience at all, whether in the Talent group or in the equipment space as well. So now we have a fairly good understanding of lithium ion cell manufacturing technology. So that is why we have -- now we took this major step, which involves a lot of CapEx as well of getting into cell manufacturer. And today, we are very well poised for a couple of reasons. One is we are today very well informed. We know exactly what in our chart of partners and so on and so forth, we had a fairly good understanding because we have that head start which others unfortunately do not. Number one. Number two is the major challenge here is to actually stabilize production. Now we have an all comprehensive, technology agreement with spot where they will be assisting us on a turnkey basis, setting up the plant and assisting us in the initial days of the production. So, we expect to have the same level of productivity and production and so on and so forth on par with this growth. We are today in the top 10 players in the world. The next challenge is the supply chain because any small players will not be able to command the same kind of pricing from the raw material supplier. Now supply chain is also tied up in this agreement. So, to cut a long story short, we can write tigers on the supply chain, which is a major advantage. -- okay? The third thing is customer connect. Again, because we have been with the OEMs and other major customers in the energy space for the last 75 years, we have very deep customer connects. So, these are some of the things which we have tied up, which have come to our mind and we are adequately tied up. So, we hope this will base us on a very good panel. And last but not the least, as I have said earlier also, I think we will be one of the first players in the multi-gigawatt hour literal space. Because our state of wariness is very high. We have already done the lumpia, already the construction activities on the approvals in unitary, -- those are being worked out. So, we expect we will be one of the first few players. Again, I'm saying the multinats -- it's not in 250 megawatts kind of those -- there are 1 or 2 players doing that. So, first mover advantage. Let me tell you why this is important. The first mover advantage in this particular area or space is immense because we take 1 to 1.5 years for the moration exercise with any customer. This is not just a way to start the car. These are better to move the bar. And therefore, it takes a lot of time and effort to actually homologate any product with the customer. It takes about 1 to 1.5 years. And I do believe that in sill have that net start. So, anyone who wants to compete will have to have -- give that time 1 to 1.5 years to get their products approved. So therefore, I think we are very well poised in this space. And starting 2024, whenever we start production, I think we will not see any dust of demand that I can clearly see at this point in time.
Perfect. No, -- and just -- if you can briefly also touch as to why our plan was not selected in the PLI scheme?
Again, as I said, we had -- we were very well informed. We knew what it takes to actually get into this area. Now the people who competed with us, they did not have this information. They were attempting to get into CLI based on whatever information they had. But I strongly believe we had a far deeper level of information. Therefore, whatever we bid for was practical and something which is achievable. -- both in terms of indigenization and some of the other things, even to set up a plant to set up 10 gigawatt of plant, what it takes is something that you only get to understand once you are deep into that exercise. So, I believe we had that information, and therefore, we bid for something which we thought we could do, not something which we could not -- not something incurs in the air. But again, I don't wish to comment on the others who have wait for it. I wish them all luck. But this is not an easy game. That's all I can tell you. We are not that -- let me put it this way. Of course, it would have been nice to the end of PLI. But again, at the levels that which we build, it's neither here nor there. It will not severely affect our profitability or anything else. -- other thing, let me tell you, if you bid aggressively and you are not able to fulfill the penalty associated with PLS.
Okay. Sir, my only concern is given that they have bidded so strongly if we see total plans in the market, it is more than 100 gigawatts. And as per your presentation, the demand by 2030 will be the 68. So. there's a question mark as to the viability of most of the followers.
Mr. Rada, can you please take a follow-up question with us because we have many other participants who are waiting for that...
No, no problem. I do that...
We have the next question from the line of Aditya Jawhar from Investec Capital.
Yes. 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?
So, as we have already declared, it's a multi chemistry multi-format plant. So initially, we are looking at NCM and Litman Cost for these 2 technologies. And in terms of format, we have the cylindrical cells. We have a prismatic cell, and we have also envisage, blade 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% and then another 6. And then from then on, depending on the demand and how things shape up, we can scale up more, although it will have to be in another location because this area can only accommodate maximum of 12 gigawatt of terms of margins. In terms of margins, we strongly believe that margins should not be very different from what we earn for lead acid battery business. So, it will not impact our overall margin situation.
Okay. Okay. Sir, and for our pantie facility, what is the current utilization level? And if you can give some flavor that which are the clientele we are servicing both on the automotive and the industrial side? And what is the margin expectation from the frontage facility? The frontage facility, as I explained earlier, we -- you have to understand one thing. Value addition is 70% with the sale, 30% with the models untrackay.
So, this is not a lithiainell manufacturing plant. This is only a model and tacking plant. And therefore, as I have said, the idea is to basically get to understand the model and packaging and how it works and so on and so forth and then to homologate some of the products with our customers. And in terms of customer base, we have got a very diversified set starting from buses to 4-wheelers to 2-wheelers also in the stationary space. In fact, we have launched an inverter or the Integra, which is actually full by site but manufactured at frantic, which is with cameras. So therefore, this is an exercise, this plant is only 1.5 gigawatt. Now, as far as the Bangalore plant is concerned, there we will be having the balanced model back-an facility. This also we believe, and the balance, which will be required that will be set up in Nagao,along with the selemetinplant. So this will kind of act together. So this is the plan right now.
Okay. Sir, my final question is, sir, considering the shift from 4G to 5G in the telecom space, are we seeing some inquiries for lithium and batteries in the telecom space? And how far are we from delivering the solution for telecom? Let me tell you as far as Fiery is concerned, 5G has 2 kinds of towers. Now they have the -- the tower -- first and color and 5G will be a separate-towers. They will not be the same. This is the information that we have got, but things can change because it's all a little fluid. What information we have got from the telecom companies is that the 5G towers will be separate. And 5G will also have rooftop last mile connectivity kind of thing, have rooftop smaller towers or transmission units. Now the ones which are nongroupock, they will be taking the standard 300 MCLR kind of Brin itself so far, that is the indication. But the rooftop one, they have -- right now, they are taking the 12 gold 42 MLR in the sell that is the indication that we have bought, and we have supplied a bit in this space. Going forward, this rooftop kind of thing, the smaller towers, they can amortisation that is suited for the man actually. So going forward, this could accommodate the terminal. But this is what the 5G rollout. But the rollout is still at an incident state right now. It will take some more time.
So thank you, sir. All the best. Thank you.
Thank you A reminder to all the participants, retardant to ask a question. We have the next question from the line of Pramod Amthe from InkedCapital.
The first one is... Audits.
I would request you to kindly use your hand to ask a question.
Is it matter now?
Yes, please proceed.
So basically, with regard to your net charge, 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? We have absorbed all the technology already. And so, there is no issue actually. And we were not posing any sell from there. They don't have -- they are a very small plant, in fact, the 250-megawatt of plant. And their sales are not cost competitive as far as India is concerned. So, we are not forcing anything from there in any case. -- only open...
And do you see still scope to have different assembly plants, one in for next charge and the other one in tenure? Or it might make sense to consolidate anything that one to find testament...
Right now, of course, we have had this share buyback range rate, which we have done with -- so we have taken the clients. And now it's with our 100% subsidiary.
So, we have essentially right now 2 subsidiaries. One is the so-called NextShares subsidiary and another one is the X Energy Solutions Limited, which is the bigger effort, which is underway. So going forward, we will take the call. So related to that, considering you have some challenges for accepting your net charge basis. With the new regulations coming now in December and March for B250,Have you received more acceptance for your product and inquires have gone up, you see more room for you to play for Asanko...
See, as I told you, this concern has basically stemmed out of what. It has sent out of fire. -- number of hires have taken place that you must have seen in the press. So, this has suddenly raised the caution at all levels, both government and otherwise. So, we have to understand why these fares are taken place. These trials have taken place because of lack of knowledge of this particular technology. One of the causes is that designed module contracts that can lead to fire. See, you have to understand one thing, these modules, they require sophisticated thermal engineering. This is not just tying up some batteries together and making some connections. These are high technology area, even though it's called modules and packs. So that is one thing. Second thing is there is a lot of lack of information. For example, let me tell you, Lithia cells should never be transported 100% Charles condition. This is not well known. Normally, the recommended recommendation is you should transport at 30%, 35% charge level of charge. Now -- once we are getting into a new area, obviously, we learn as we go along. But some of these things can cause mishaps. So now, of course, people have woken up to this reality, and I'm sure the regulations will help to certainly streamline some of these concerns. As far as we are concerned, we are always ahead of the curb and we, right from the beginning, have taken all possible precautions to ensure that our products are safe and user friendly... George, going to others.
Thank you. We have the next question from the line of Navin Sahadeo from Nova Securities.
So sir, I have a new digital line and proceed with your questions -- as the current participant is not answering, we move on to the next participant. And the question is from the line of Vibhav from JPMorgan.
My first question is on the export side related to lean 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 and ESP improvement?
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 aloe, U.S., the Meka region, Southeast Asia. So, we are fairly well spread out. And in certain product categories like traction sales, we are the vendor of choice by the largest forces manufacturer in Germany, which resumed right. So, we are very well placed in this and we are growing rapidly. And we see good prospects going in.
Got it. And just a follow-up here. We have heard that EVs also have an auxiliary battery, which required lead asset content. So, have you like kind of started supplying those batteries also to the current electric vehicles that are in the market? Any thoughts on that?
We have a number of inquiries from various people to make the agreement factory. It's called the binary et is the battery, which is required to -- for your windows, power windows and white pores and so on and so forth. The mean that we only drives the car. So yes, we are very much in this space, and we are manufacturing these batteries and there are a number of RFQs from various customers.
Got it. And my second question is on the lithium ion space. So, what we are seeing right now is that the sales are being sourced from, say, Korea, China and then getting assembled by some of the OEMs itself of themselves. But if I look at how strongly the government is focusing on localization content, if you were to include the battery cost, the localization content in NE is quite low right now because of, obviously, sales are being potent. So, do you see regulations may be changing in favor of domestic sales manufacturers, including yourselves over the medium term?
Yes. I strongly Vinit, because as I said, the value addition, again, generally speaking, is about 70% with the sale manufacturing and 30% will be model impact. So once that value comes within the country, I'm sure it will encourage other people also to get into it. And also, what is happening right now is it is motivating a lot of upstream activity in terms of anode, cathode and cell manufacturers to look at India as a destination to manufacture their products, which become inputs for our cell manufacturing. So therefore, number one, it will surely encourage a lot of manufacturing activity, number one. Number two is that I think the government is actively encouraging this making India a one concept. And once the industry gets going, I'm sure there will be a lot of encouragement from the government as -- and there is no reason as to why we should be not competitive.
Got it. Thank you so much. I'll come back in the queue.
We have the next question from the line of Pramod Kumar from UBS Group.
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 weather and for how long we've been having the License lab in-house in the company because that's again quite important. So, if you can just help us understand this to begin with.
How many people. So, people, we have started taking -- we have already completed the top-tier recruitment as I said earlier, and the tenant 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 a bit of change on the R&D side on the on the -- for the Natoma project.
Yes. So, have got, for example, we recruited our CTO. So, she is building the R&D this thing under her in terms -- initially in terms of talent. And once the actual building comes up, the trial line and so on and so forth. All that is required for R&D, that will be set up. So, we are well on our way to make a very, very modern and state-of-the-art plant in Dana.
And sir, on the lithium cell lab, do we have a cell lab in-house already...
No, we are going to make one. We are going to make on Lithium. As I said, line manufacturing, that entire project has yet got the green signal in terms of the land from the government. And now the construction activity, Bumipujahas just been done. -- construction activity has started. So all the lab and other things will be set up there in that receipt.
And so on the Parliare you already making investments on the BMS side, sir, for software development for the BMS because you would want to see the integrated player, right?
See that the module at the BMS, -- that is what I was saying earlier, that has already been seeded with the Nexcare facility. So, it's already we are well on that as far. And have we commercialized that some asset because what we're seeing is some of the BMS which come from abroad or technology, which is also at haven't been exactly very impactful in India. Because... BMS has to be customized with the customer -- it cannot be just a general BMS. It and what the customer wants, what is looking at, whether he wants us to do the BMS, sometimes the customer do the GMs themselves... Yes. So, there are lots of variants, which are possible here. So whichever customer wants the BMS, we'll be happy to help them do it or do it ourselves and sell it to them, we your they want.
And sir, you did talk about this state-of-the-art manufacturing facility is coming up. But when will it be ready, sir, so that -- because it will be really interesting to come and see one of the -- one of the first large plants, which is being set up in India. So what is the expected time line there?
Time line is 2024 towards -- I mean, basically, 2024, '25 financial year if you look at it, it will be towards the latter part, not towards the beginning of '24/'25, but it was a later part. Full-scale production should start from 25, 26 onwards. So initially Q1 will go in stabilizing the production...
Fair enough. So, thanks a lot, and I wish you all the best, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, this would be the last question for today, which is from the line of Navin Sahadeo from Duvama Securities.
Yes. I have just one question. Is it possible to share the technical collaboration agreement terms with sold 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.
So, to answer your question briefly, it is not possible for us to divert the 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 this is nothing out of the ordinary.
I guess. I get... That's helpful. Thank you and all the best.
Thank you...
Thank you -- as that was the last question for today. I would now like to hand the conference over to the management for closing comments.
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 you assistance. Thank you.
On behalf of Its Industries, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.