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
|
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.
Earnings Call Analysis
Q4-2024 Analysis
Exide Industries Ltd
In Q4 FY '24, Exide Industries witnessed one of its strongest quarters in recent memory. The company reported a sales growth of 13%, marking a robust double-digit revenue increase. This growth was consistently spread across all verticals, including automotive and industrial segments. The EBITDA margin expanded by 250 basis points to 12.9%, showcasing improved operational profitability.
The automotive sector experienced a notable recovery in four-wheeler demand for both OEM and aftermarket segments. Additionally, exports saw an uptick driven by demand from the Middle East. In the industrial sector, positive macroeconomic factors provided opportunities across various end markets like institutional UPS, solar, traction, and infrastructure, all of which posted strong double-digit sales growth.
For the full year, Exide maintained a healthy sales growth momentum of 10%, supported by strong volume growth and an improved product mix. The company also focused on operational efficiency and cost optimization, leading to a 100 basis point increase in EBITDA margin, which grew 19% in absolute terms. Strategic price hikes helped in offsetting raw material cost pressures.
Exide has launched several innovative solutions, including Exide Sunday Solution for rooftop solar, special energy storage solutions for data centers, and battery energy storage solutions for specific power applications. The company also forged an important alliance with Hyundai and Kia, reflecting its technical prowess in the lithium-ion cell manufacturing sector.
Exide Industries has already invested INR 2,000 crores towards expanding its lithium-ion cell manufacturing capabilities and plans to invest a total of INR 5,000 crores in this project. The company aims to finance these investments through internal accruals and short-term bridge loans, depending on cash flow situations.
The company's continued focus on operational efficiencies and digitalization has enhanced productivity and reduced operational costs. Exide's tech-enabled systems allow for seamless integration from order placement to warranty decisions, making Exide a leader in leveraging technology for operational excellence.
Exide remains optimistic about the future, driven by the strong demand for lead-acid and lithium-ion batteries. The company expects sustained demand from the automotive sector due to increasing urbanization and mobility trends. Additionally, ongoing infrastructure investments are likely to propel industrial segment growth. Exide is well-positioned to capitalize on these opportunities, thanks to its strategic initiatives and robust financial health.
Ladies and gentlemen, A very good afternoon, and welcome to the Q4 FY '24 Earnings Conference Call of Exide Industries Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Aakash Gopani from Investec Capital. Thank you, and over to you, Mr. Gopani.
Thank you, Mitchelle. Good afternoon to you all. From Exide Industrials, we have with us, MD and CEO; Mr. Avik Roy; Director, Finance and CFO; Mr. Asish Kumar Mukherjee; and MD and CEO of Subsidiary EESL, Mr. Arun Mittal; President and Company Secretary, Mr. Jitendra Kumar; and Head Investor Relations, Chhavi Agarwal.
Before we proceed, here is the disclaimer for the call. Few statements by the company's management in the call may be forward-looking in nature, and we request you to refer to the disclaimer in the earnings presentation for further details. We will start the call with brief opening remarks from the management followed by Q&A session. I would now like to invite Mr. Avik Roy for his opening remarks. Thank you, and over to you, sir.
Thank you, Aakash. Good afternoon, ladies and gentlemen. A warm welcome to all of you who have joined the call. At the outset, I would like to take this opportunity to thank all our investors for their continued support and trust in the company. At Exide, our focus remains on delivering sustainable performance. We have taken multiple initiatives over the years to be future-ready. We make this company efficient, agile, innovative and ready for the future. These are exciting times and we are all well prepared to look forward to a promising future.
Let me start by giving a flavor of the quarter that just passed by the last Q4. And give you some color of the performance, which we had in Q4. At this point, we consider it one of the strongest quarters we had in the recent past. We posted our sales growth of 13%, a double-digit revenue growth, which was broad-based across the verticals that we play in. This was quite satisfying because it was not based on only one vertical, but all the verticals, more or less, they posted same level of performance.
So we also reported one of the best operating profitability in the last few quarters with the EBITDA margin expanding by 250 basis points to 12.9%. In the automotive vertical, we continue to do well in both OEM and aftermarket segments. Four-wheeler demand has made a good comeback in Q4 in both OE as well as aftermarket. Exports also saw an uptick on the back of demand from Middle East.
For the industrial vertical, the macros remain extremely positive, presenting opportunities across all end-market verticals. Most of our verticals, including institutional UPS, solar, traction and infrastructure have delivered solid double-digit sales growth during the quarter.
Industrial exports has also shown resilience amidst harsh operating environment arising our proper geopolitical concerns.
Let me give you a quick look at the full year's financials. We maintained a healthy sales growth momentum of 10% driven by a strong volume growth and improved product mix. On the automotive side, the second half saw a strong pickup across all product categories. Aftermarket was impacted in the first half due to lower demand arising out of the lower regular sales in the COVID period as replacement demand typically kicks in nearly 3 years after the OEM supplies. So the impact of the first lockdown in OEM sales impacted the aftermarket in the first 2 quarters of this year.
We have a strong pan-India network of more than 115,000 channel partners, and we are also taking a lot of data-driven approach to identify areas that need further strengthening to serve our customers better. We also provide quick and efficient support through our Exide back mobile doorstep service to our vehicular and inverter battery customers. This service is available in more than 300 cities and the turnaround time is less than 2 hours.
This what we consider as our strength and the differentiator in the market. On the industrial side, an investment supercycle, coupled with government focus on infra spend led to an accelerated demand, and we were very well positioned to benefit from these opportunities.
Like last year, our key verticals such as UPS, solar, telecom, infrastructure, motive power have grown in high double digits, even at a high base. We continue to keep an eye on the future and have launched a series of innovative solutions for tomorrow.
For example, Exide has forayed into this rooftop solar solutions, which we call Exide Sunday Solution. This is to encash the opportunities that have been thrown up by the Prime Minister, Suryodaya Yojana recently. We have come out with special energy storage solutions for data center applications.
We have come out with BSS, battery energy storage solutions, for specific power applications. These are few innovations we have got into actively. We augmented our manufacturing capacities in areas that we believe are the clear growth hot spots for the future.
Talking about margins, our EBITDA margin has increased by nearly 100 basis points in the full year, growing by 19% in absolute terms. Our sharpened focus on operational efficiency and cost optimization led to lower operating costs. As a result, fixed cost as a percentage of sales have declined in the last 2 years.
Even though raw material prices have largely remained range-bound in the last few quarters, we have taken calibrated price hikes, which have supported the margin. Our digitalization initiatives continue to help us in streamlining our operations and be more efficient.
Exide is now a true tech-enabled organization, which I'm very proud of. In the automotive channel partners -- in the automotive sector, the channel partners connect directly to Exide from placing orders to channel finance to on-spot warranty decisions. This is the power of digitalization.
Now talking about our lithium-ion cell manufacturing subsidiary, Exide Energy Solutions Limited. As mentioned in the presentation, the project is progressing very well on all fronts. We have a team of more than 300 professionals tirelessly supporting the execution across key functions: Sales, manufacturing, procurement, R&D, IT, finance, quality, safety. Across the organization, we have manned or people.
We are working towards onboarding new customers and securing raw material supplies, both in domestic as well as from international markets. Our recent alliance with Hyundai and Kia is a testimony of our technical expertise in the lithium-ion cell manufacturing space. So far, the parent company, Exide Industries have invested INR 1,285 crores in FY '24 alone. And with this, the total equity investment in EESL is INR 2,302 crores till March '24.
In terms of the outlook for the lead acid business, the core business of Exide, the demand scenario remains update in the near to medium term. In FY '24 alone, domestic production of passenger vehicles reached close to a 5 million mark. This does very well for our replacement business in the coming years.
With rapid urbanization, increasing inter and interest rate connectivity, demand is expected to remain high in the automotive vertical. Additionally, new opportunities like auxiliary batteries for electric vehicles are also rising.
On the industrial side, the government's focus on infrastructure spend has worked as a major growth driver for the products and solutions that we have. Our exports has always been a focus and it is getting even more focused now that we are going global as a company. Our focus is to strengthen our presence in the existing markets by offering new range of products such as the products which are fit for the market, for example, AGM batteries for SLI applications and enhanced flooded batteries for SLI.
We are also expanding geographically by placing resources in key markets to drive business growth and to provide prompt on-ground support to our customers and Chinese partners wherever required. So with this, I come to a close of my opening remarks, I'll be very happy to take your questions now. Over to you, Aakash.
[Operator Instructions] The first question is from the line of Vibhav Zutshi from JPMorgan.
Congrats for a strong quarter as well as the MOU with Hyundai and Kia. My first question is basically on this partnership. Could you provide some more details around the potential size of this contract and also share if you are going to be the exclusive supplier of after sale. Basically, Hyundai, globally has been -- has announced building battery cards of 20 to 30 gigawatt hour with LZ and SK innovation. So just trying to understand whether Exide can also look at such scale or sell capacity over the longer term. So some more details on this partnership will be really useful.
Thanks, Vibhav, for the question. Regarding this, we have already made a segment in the public domain, which you can refer to. Beyond that, you have to appreciate that we have signed a nondisclosure agreement with our client. So we have limitations in telling -- giving you more details at this stage. However, I'll request my colleague, Mr. Arun Mittal, MD and CEO of EESL, to throw some light on this, based on the public disclosure that we made. Arun?
Yes. So, Vibhav, as you're aware, we have signed a nonbinding agreement with Hyundai and Kia. So this is a global platform which Hyundai is developing. And till now, basically, they were using NMC Chemistry from SK. And they are also realizing Hyundai -- the customer is realizing that there's a lot of merit in shifting to LFP connection. And looking at our readiness of our plant and we be in a very sweet spot and be able to offer them local supplies, which is very critical for all the OEMs going forward.
So they have gone ahead and signed a nonbinding agreement at this point in time. We are working on the details in terms of capacities and all that, and that is something which is still work in progress and has not been finalized. So I think the shift, which I can confirm is from NMC to LFP. I think that is what has got them interested. And secondly, our readiness of the plant, which should be able to take them local supplies because domestic value addition is a significant aspiration of all the OEM manufacturers in the country.
That's helpful. And just as a follow-up. So you have been mentioning in the past that margins in lithium-ion manufacturing for you won't be materially different from what you do in the lead asset business due to the pricing advantages. Now given that we are only a few quarters away from commissioning, would you be able to provide some color around margins, ROCE, any range? Or would you stick to that guidance that it will be similar to what we do in the core business?
I would request Mr. Mukherjee to take that question.
Yes, that's right. Asish Mukherjee here. So no, of course, we are in the process of first starting the commercial production and then there will be a stabilization process. And of course, the margin will come when we reach the full capacity utilization. At that stage, we expect to be in the range of the mid-teens as far as margins are concerned. And the return on capital, of course, it depends also on the commodity prices, because while the margins we can expect to keep around mid-teens, but it also the absolute terms, it depends on the commodity prices.
Absolutely.
Yes. it is too early to comment on that. I think going forward closer to the debts or closer to where at time, we can give more color to it.
Sure, sure. And my second question is on the lead acid battery business. Given the strong volume growth that we've been seeing for the last 2, 3 years, any capacity expansion that you think would be required for this business? Or is the current capacity enough to meet demand for the next few years?
So, Vibhav, let me take this question. So you must have heard in public domain, the top 2 auto manufacturers of the country, the way they are investing in their IC-engine capacity. So we are in a reflected business. So obviously, we have to take steps towards adjusting our capacity to the demand, which we are doing constantly, and we keep on doing that. And we'll adjust our capacity to make the entire demand. We are investment.
Okay. So to the adjustments only, you'll be able to do it for now?
Yes. Generally, if you have seen our trend of the last couple of years, around the ballpark of INR 500 crores, which is more or less equal to our depreciation, that has been our CapEx outlay for lead acid business.
The next question is from the line of Kapil Singh from Nomura.
My question is on the lead acid business. I just wanted to check what is the demand outlook there for different segments. And also you mentioned rooftop solar. So if you could give your thoughts on what could be the competencies that Exide could have in this business?
Sure. So I'll first take the outlook on the -- some of the important segments, some of the larger segments. The way we have seen this year, the way we have seen the automotive production bouncing back in the last 2 quarters in H2, and particularly quarter 4. And with the capacity addition, plans of some of the major OEMs of the country. We're extremely bullish on our aftermarket potential after 3 years. We have maintained our market share very strongly in this environment, and we think we should be able to do it. More urbanization, more mobility, more intracity as well as intracity mobility and more, there is a demand for passenger vehicles. And we think that they will be able to guide on this demand.
On the industrial space, as I've already mentioned in the opening remarks, we are benefiting out of the infra CapEx of government, the infra CapEx outlay, number one. And we have to understand our business is kind of a battery business is a short-cycle business. It generally happens at the lead cycle of CapEx. So whatever CapEx programs or announcements of the outlets you see today, actually, these projects will result in our business, maybe 12 to 18 months later. So whatever growth we are seeing now is basically a tail end of the earlier cycle as well as the short-cycle business, which we do in the aftermarket of industrial space.
So this gives us a lot of confidence, and we are also preparing ourselves in terms of competence and in terms of capacity to ride on this. Various outlooks -- the outlooks vary from segment to segment. The UPS segment is riding on the -- purely on more and more data usage and data penetration in the country, the need for critical power is increasing. It's no longer a power backup, it's more of critical power, health care, hospitals, banks, schools and everywhere, we see this requirement of UPS going -- this digital UTI payment has led to a lot of opportunities in UPS business in rural India.
Similarly, renewables, I don't need to mention you are already in the newspaper the future renewable has for this country. The other segment because come back at Chile is basically the thermal power segment. The thermal power generation and power transmission segment, which was lying dormant for the last 6 years or 8 years maybe, it has come back. And this is where we see incremental huge demand year-on-year, which we continue I'm told for the next 5 to 6 years to just complete the ongoing projects. This more or less the flavor of the outlook for the future.
Regarding rooftop solar, let me tell you that we are completely trying -- we are actually trying to organize an otherwise unorganized sector. We are using the power of Exide brand for consumer, the service, which they are getting from local and organic sectors in terms of rooftop installations. And what are we providing as a value, we may have noticed that we are designing the complete solution for them. We are designing and we are using technology for that from remote to our office to GPS-activated devices, we are designing the plan for the layout of the roof and designing a solar solution for them. And we are installing it for them, and we are giving a 5-year comprehensive warranty on the total solution, not our individual products only. So this gives a lot of confidence to the consumer that they have Exide brand to stand behind them for any kind of service requirement or a voluntary requirement. So this is how we are generally leveraging on the power of our brand and the quality of our service. Does that answer your question?
Yes, sir. Also, just on the lithium-ion business, I had one question. Just in terms of pricing policy for cells, what's are the following in general. It is a cost-plus model? Or is it a fixed-price model? And how does our pricing compare to current pricing in China? And also, if you could talk about at what level of utilization does that facility breakeven?
So I'll request Arun to take this question, please.
Yes. So this repayment pricing -- battery pricing is normally indexed to the major raw materials, this is a standard practice, which is really followed. And we plan to follow the same next approach so that any increase or decrease in raw material prices is passed on to the customer, number one. Number two, as far as the pricing of -- current pricing of lithium-ion battery is concerned, the customer -- as far as customers are concerned, they are looking at parity of imported mandate. So I think as a company, we also have to offer prices, which are at par with imported landing.
So we have a comprehensive agreement with SVOLT, which entails also helping us in setting up the supply chain. And we will leverage on, they are buying kind of volumes. We will club our volumes with their volumes, and we will be also able to source raw materials competitively with SVOLT resourcing and that gives us the confidence that we should be in a position to offer prices which are at par with imported landing. And regarding your second question, I think, Mr. Mukherjee already answered that. Once we reached 80% to 90% of capacity utilization, I think that is the time where we can hit our intended margins.
My question is not on an intended margin, my question was what is the breakeven capacity utilization?
Sorry. Can -- just your voice cracked. Can you just repeat the question? I just lost your voice.
Yes. What I was checking is, what is the capacity utilization for breakeven of this facility, say EBITDA breakeven is positive at what percentage utilization?
So breakeven, I think you should be able to do at 50% to 60% capacity utilization.
The next question is from the line of Jinesh Gandhi from AMBIT Capital.
My question pertains firstly a clarification on arrangement with SVOLT. So we have agreement to pay variable royalty or some fixed technically fee basis?
So this royalty is not in the public domain. So we would request you to not press us for this information. This is something which is not in the public domain.
Okay. But it's a royalty basis, not the technical fee basis. Got it. And second question for things to, again, continuing on the lithium-ion side. So when we say nonbinding agreement with Hyundai and Kia group, it means there is no concrete -- there is no clarity on what kind of volumes offtake will be there or pricing or that thing or won't be mean by a nonbinding agreement?
So nonbinding agreement basically means that both the parties will intend to work together, right? And between nonbinding to binding, a lot of new brands have to be tied up. In terms of the entire time lines of the plan, in terms of the development of the cell with the help of SVOLT, in terms of setting up additional plant, in which for meeting the particular requirements. So I think there's a lot of work to be done. So all that work is still work in progress and as soon as it materializes, I think that is the time we'll probably be able to share more information. Right now, as we said, this is still work in progress.
Okay. And this would not be exclusive arrangement, which Hyundai will be having with us for the Indian market?
So let me tell you this. So the way it works is that when a vehicle manufacturer and particularly I speak in reference to passenger vehicles, when they partner with a battery manufacturer, the entire development, it is done jointly. It is kind of a co-development actually. So both the battery manufacturer and the vehicle manufacturers we work very closely in terms of optimizing the energy density or optimizing the space, optimizing the cost, quality, everything, right?
So this is more of a partnership and in these kind of programs, it is normally not a practice to work with multiple partners from battery sourcing point of view. So Hyundai for this particular model would be exclusive to Exide. And that is because this is the global practice. No OEM works for one program with multiple battery manufacturers because that increases the complexity and the variable.
Got it. Now this is very insightful. And not even with respect to the lithium-ion. So from here on, you indicated we have invested close to INR 2,400 crores, INR 2,300 crores so far. What would the balance investment...
Yes. Mr. Mukherjee can answer this question.
Yes. As of now, we have invested INR 2,000 crores in EESL. And of course, the other unit, which is a pack and module-making unit that investor earlier, we invested about INR 300 crores. So put together, it comes to around INR 2,300 crores. Now total investment as in the Phase I, CapEx will be approximately around INR 5,000 crores. And will definitely -- we are quite confident of financing this project. Initially, there will be some big loans because cash inflow and outflow, there is always a mismatch and the project cannot wait for the cash flow to happen. So there will be bridge loan initially for certain amounts and -- which we are confident enough to repay over a period of time.
Right. But okay, what would be incremental further investment from Exide into EESL?
Investment for the current year, we expect to invest around INR 1,000 crores.
Okay, okay. But the Balance INR 2,000 would be through bridge loans?
As of now, but it all depends on the cash flow. And as I said, that this loan will be kind of a bridge loan, whenever it's required. And on the cash -- depending on the cash flow of the core business, we're confident that we're paying it.
Got it. Got it. And last question for the fourth quarter performance. So we have seen a very good improvement in margins in fourth quarter, third quarter. So this would have been driven by what mix and price increases or we have seen anything else also? And what kind of price increases we have taken in replacement market in the fourth quarter?
So the last question first. We haven't taken major price increases in fourth quarter. But we have been taking calibrated price increases throughout the year as and when it triggered us. To answer your question about the fourth quarter margin expansion over Q3, there are a couple of things which favored us. One is, of course, our core raw material lead. We had a favorable lead environment in Q4, which was better than last year's Q4 also as well as the previous sequential quarter also.
We also had a better mix in terms of 2 things. One is our high-margin products sold more than the low-margin product across the verticals. The third reason is that also our trade to OEM ratio improved in fourth quarter. So that improvement may be at a very high base, even 1%, 2% shift of that ratio creates a lot of favorable impact on the company's borderline. And most importantly, we have been undergoing this cost-optimizing initiatives over the last 2 years, particularly on factory costs. So that project is almost coming to an end and the results are starting accruing.
So fourth quarter, we got some favorable benefits from those cost-optimizing initiatives also, which we'll see more and more in this fiscal year. So all these put together has created a favorable bottom line environment for us in the Q4.
The next question is from the line of Arjun Khanna from Kotak Mahindra Asset Management.
Congratulations on good set of numbers on the fourth quarter. Sir, my first question is on the lithium-ion side. In terms of yields, et cetera, are there any agreements that we have with SVOLT in terms of the output? And are there any milestone-based payments that we would -- that could accrue to them that we would need to pay in this year or next year?
Arun?
Yes. So the agreement what we have with SVOLT is exhaustive. It covers 4 aspects. So one is the transfer of IPs and designs for the intended cell, what we intend to manufacture. Second is helping us in design and setting up of the plants and procurement of capital equipment. Third is to help us in setting up the supply chain from China because. Unfortunately, supply chain does not exist in India. And lastly, also to help us in ramping up the production and help us in achieving the required deals. So it's a very comprehensive agreement with SVOLT accompanying all these 4 aspects. And of course, the payment terms, I would not like to discuss because that is something...
Sir, I just wanted to understand, would the payments be front-ended or they would be over the lifetime of the product?
No, these are milestone based as those agreements span over these 4 broad areas of collaboration.
Right. Sir, since we are on the lithium-ion, sir, in terms of Phase 2, at what point in time we take the call on going ahead with it? Would it be 1, 2 years after Phase 1 commences production, we scale up or Phase 2 would probably happen quicker? Just current thoughts at this point in time.
So I think as soon as we have a visibility for kind of evacuation of our Phase 1 capacity, we start planning for Phase 2. Phase 2 will be much faster because the entire project, entire land has been developed, all the utilities are already placed. So it is just a kind of a very short cycle, we'll be able to set up the additional capacity. And that we will do as soon as we see the visibility of evacuating the Phase 1 capacities.
Sure. Sir, my second set of questions were on the lead asset side. We did mention some of our key export segments such as motive power, et cetera. Are we seeing a decline in motive power given that the world is moving towards advanced side chemistries?
See, on the motive power front, this is not so much driven or decided by the consumer customers, driven by the OEM and their strategies for sustainable goals. Now on the -- just to give you one sense on the vehicular space, the shift is from IC engines to batteries, which means from fossil fuel to electric. So likewise, in motive part, you already have electrified pole, which is running on lead acid today so that the cell-to-electric shift is happening, but the cell-to-lithium-ion is not a mandate for any -- for the market.
So we see more and more electrification in favor of lead acid battery. Now some of the OEMs have come out with lithium. There are applications, but we don't see a threat in it because when we talk to our customers and even some of the OEMs, this is -- this will be part of their portfolio, but this will take a long, long time to become their core business. There are many reasons for that. I'm not going to the detail. But you have to also understand that it's some of the rich trucks and forklifts trials, the lead acid battery, which is much heavier and lithium impact also work as a counterweight.
So this is something we'd see a value in it. And so far, the innovative products, which we and many of the players in this space are developing on the lead acid side to increase the cycle life of a lead acid battery. We see that the global penetration of lithium-ion will be much slower than electric vehicle. And we are not worried about it. I mean, in any case, you must appreciate that we have very little old market share. So to feel that we reach a 60%, 70% market share. There is a whole lot of opportunities for all of us.
No, perfect. This is very good to hear, sir. Sir, just the last part to this. In terms of margins, we had given a guidance, maybe we are not as a hard guidance, but our trajectory is that 12% to 14% EBITDA margin range is what we are comfortable on the lead acid side. We have obviously moved closer to that zone at this point in time. How difficult do you believe would be for us to maintain in this pad? Are there risks that for next quarter or the quarters after we may come below?
See, first thing, I'll just take the first sentence and then hand over to Mr. Mukherjee. You have to understand we are dealing with our product builds with the commodity, which is hugely volatile. So commenting -- giving our guidance based on a volatile commodity, will not be proper for either you or me. Having said that, we have taken a lot of other operational actions to sustain our margins and we have declared that also that we'll reach our pre-COVID margin levels within a short time, and we maintain that. I hand over to Mr. Mukherjee to give you further color on this.
Yes. As Mr. Roy said, that's -- first thing I would say that we don't give any guidance on the margin for the future. Our -- as Mr. Roy said that we are engaged with some cost optimization initiatives and which have started giving results. We definitely expect our margin to stabilize at pre-COVID level. But there will be, of course, fluctuations quarter-to-quarter because the commodity prices are extremely volatile. And it, of course, over a period of time, it is passed through to the market. But it doesn't happen on an online basis. There is always a lag. So at times, it affects the margin to that extent.
[Operator Instructions] The next question is from the line of Nishit Jalan from Axis Capital.
Congratulations on good set of numbers. I have 2 questions on the lithium-ion battery business, right? So good to see that Hyundai MOU, any more such customers where you are working with or where you have started getting orders big incumbent OEMs in terms of whether orders or MOUs because your plant will get commissioned towards the end of the year. So how should we look at a commissioning of that plant and what kind of orders you have already received? That is number one.
Number two, since you mentioned yourself that supply chain for battery doesn't exist anywhere except China, what kind of localization -- what are the key areas where we are doing localization? And what would be the localization content that we could have in our battery plant?
So let me take the second question first. So the supply chain follows the capacity of the batteries. So unless there is a capacity of 50 gigawatt hour in the country, the supply chains will not be -- we will not see a good growth in supply chain here. Having said that, there are some large players who have spent out their intention of setting up local supply chain, Madhavi Chemicals, for example, is one large player, which has shown interest in setting up capacities for the LFP CAM and also for the anode material.
Similarly, we have another set of companies who are looking at various active and passive components will go into a battery. So the short answer is that as we see more and more battery capacity coming up in the country, the automatically supply chain will follow the battery capacities. And regarding your -- can you just please repeat your first question?
My first question -- sorry, first a follow-up on this. So yes, you're right that industry needs to start first, and then we will see localization happening of other components. But when we start our plant or start manufacturing in the first year, it will largely be import-based? Is it fair to assume that? And import context will be fairly high?
Yes, that's correct.
Okay. Okay. My first question was on the -- on basically order remains from OEMs. So we are starting our plant. So like we have got...
Sorry, I have a constraint in disclosing the name of the customers.
But not the names, not the names, not the names. Without disclosing the names, if you can give some color if you have got orders from any incumbent big 2-wheeler or 4-wheeler OEMs, which will start -- which will get into production as you start the plant, right, because we will be starting our plant towards the end of this financial year, right?
So what I can share at this point of time is the telecom industry is moving to lithium-ion batteries. And I think we have started our commercial supplies to tower companies. And on the automotive side, we are working with 2-wheeler, 3-wheeler, 4-wheeler and the bus companies, all sets of customers we are working. And these are at various stages of engagement with the customer. We have a very high level of confidence that we should be able to evacuate our full capacity closer to -- as soon as we are able to ramp up the production and stabilize the production.
Okay. That would be great. Just one more follow-up. I'm not asking for any nonpublic information, but just to understand how it works. So when you sign an MOU, how much time can it take to translate that into an order and you start supplying them? And is there a possibility that even after signing an MOU, that does not profit into an order?
So let me answer the first question first. It is already a developed sell with either Exide or SVOLT, when the lead time for supplies is very short, actually. So for example, if the customer is interested in taking up one of the sales which we intend to buy. And this is already in production with SVOLT in China, then I think the leaping for supplies can be very, very short, actually.
For example, many of the 3-wheeler customers, the telecom customers are planning to take a particular cell, which is in mass production in SVOLT and we also plan to make in India. So this is something, which gets into a smooth kind of migration from China to India as soon as the plant ramps up, right? But if it is a new cell development, then it normally takes a year of time to develop the -- design the cell and validate the cell. So this is the difference between an existing cell and a new cell. And I think -- have I answered your question?
So the only part which is left is, is there a possibility that even after signing an MOU, it does not translate into an actual order and supplies?
So we -- a nonbinding MOU is that there can be a slip between the cup and the lip. Having said that, I would only mention this that this was a global announcement by Hyundai, right? And -- we are very actively engaged with Hyundai in terms of the next steps in deciding on the capacities that we've built up for that cell and the development and all that. So I would say that these stances could be very, very minimal of not getting converted into another.
And this will be for Hyundai India, right, whenever it translates into an actual supply order.
Yes. It is basically for -- these platforms are global platforms, as I mentioned earlier. But -- and these global platforms are like whatever vehicles Hyundai makes in India. These are exported all over the world. It is a global platform. This will be made in India, and they wish to procure these cells locally made in India. And these will be -- these vehicles will be sold in India and all over the world like it, that is the whole plan.
Okay. Okay. Sir, one question, one clarification...
Sorry to interrupt, sir. I may request to kindly rejoin for follow-up questions. We'll take the next question from the line of Deepak Jain from Enam AMC.
Sir, congrats on good numbers. Sir, my question is that on PLI, have you opted out or can you give some clarification on that?
Yes, you can take that.
PLI.
Yes. So as you all know, PLI is only meant for greenfield projects. And since we have progressed so much into the project, it was difficult for us to meet the tender conditions, which are basically one of the conditions in the tenders take place that the construction has to start after the signing of the agreement with the government of India. So that may be very difficult for us, and that is the reason that we did not participate in the PLI.
Okay. Sir, my next question is the agreement with Hyundai. You said it is for one global model. Sir, does the negotiation with other customers also happen model-wise? Because I believe Hyundai is planning to launch 3, 4 EVs globally till 2030. So it is model by model negotiation? So I said the platform. So the models can be on the same platforms. So right now, what we are talking of and what is relevant to us as a platform. So one particular platform that we are working with Hyundai.
We plan to give one of the cells of electric prismatic type.
Okay. And sir, can you give the order book of EESL?
So I think we have a strong order book. From like last September, we are having an order book of INR 600 crores, INR 700 crores. And we see a strong pipeline going forward.
Okay. Sir, my last question is on lead acid. Can you tell me the value and volume growth for Q4?
Well, for the -- the value growth is 13% that we already announced. The volume growth is around that number. As I said, volume was a key driver for that value growth for us. So around that number only.
The next question is from the line of [Dia Rijhwani ] from WhiteWall Partners.
My question was how are we looking to fulfill the EPR application? I understand that we have an internal recycling unit, but just wanted a sense of your -- I mean, your perspective on how are things on ground? And what's the penalty levied in case of noncompliance?
So let me request our Company Secretary and Chief Compliance Officer, Mr. Jitendra Kumar, who's in the call to respond to that.
So this EPR certificate, as we understand, this is coming out of this BWMO requirement. And what we understand that this is still work in progress. In terms of quantification of the entire obligations, we understand that this quarter is still being developed by the CP CD. So we are ready at our end. But as soon as we get more clarity on this quarter, more clarity on those rates and quantification of the liability, then we will be able to -- but as far as we are concerned, we are confident that we are more or less meeting our requirement as of now. And depending upon how this situation pans out, then we will see the -- we will quantify the requirement to outgrow the EPR obligations.
Got it. Just a follow-up on this. So how do you ensure -- I mean how do you manage the supply chain for the chloride plant? Don't you see any leakages towards informal recycling guys given that they offer a higher price to the dealers. So just wanted your sense as to how do you procure these use lead acid batteries.
So let me take this question. Chloride metals is a very important material subsidiary that we have within Exide industries. And almost -- more than 60%, 70% of our requirement is fed by chloride metals, which includes even pure lead procurement and things like that. And we have multiple sources of collecting these batteries. And one of the major sources, of course, imports, which we are actively engaged in and we are increasing our shares of collecting imported batteries. This is to seed the lines. And as far as fulfilling our BWMO or obligations, we have opened up new channels through our sales team activated them to increase collections from our dealer network from the B2B business as we participate in auctions and to get these collections. So from the industries, we make a collection.
So these -- some of the customers and most of the customers, they also have -- they also want to be with people like us. So we have been fairly successful, and that is why my colleague told you that we are well prepared to make this obligation. And I think we are best placed because we have our own recycling unit for which also we are investing in augmenting the capacity. So chloride metal themselves are also investing in increasing their smelting capacity. So more and more whatever we pick up, we can recycle it in-house within the group. So I think we are much more prepared on this than many of our competitors because we have this in-house recycling facility ourselves.
So how much is the percentage of imports, which is used for the recycling plant?
At this moment, I don't think it's safe for me to give a percentage. But overall, because this is related to chloride metals, Exide does not import chloride metals imports. So I would not like to give an exact percentage for chloride metals because it's not in public domain. But all I can tell you, chloride metals today supplies about 60% to 65% of Exide sales requirement, which is only to go up because they are also -- they also plan to invest in their capacity.
We'll take the next question from the line of Aditya from Investec.
Congratulations on a good set of numbers and congratulations on the partnership with Hyundai. Sir, I mean, it's very heartening to hear this partnership for the 4-wheeler batteries. Similarly, if you can give us some light on the 2-wheeler side, has there been any development? So once our cell capacity comes on stream, we can clearly supply to our -- next charge facility in Ahmedabad. But beyond that, have you entered into any discussions for supplying lithium-ion cells to any 2-wheeler manufacturer, whether incumbent or a new-age company? And if you can throw some light on this aspect?
Yes. I'll request, Arun to take this question, please.
Yes. So, Aditya, we are in active discussions with all the 2-wheeler manufacturers who have electric wheel program. And these discussions are at the various stages for supply of sales stock back. Since we have an NDA, I am under constraint not to reveal any specific details at this point of time. But as and when the agreements mature and there is a public disclosure, we all will come to move through it. But just to reinforce that we are in active discussion with most of the 2-wheeler manufacturers who have electric vehicle program.
Okay. Okay. Sir, and just one thing on our partnership with SVOLT, as of now, we are in partnership with NMC and LFP that is for automotive application. And over a period of time, are we also working on application on the industrial side, whether it is storage wall or these kind of applications for storage? Or is there a separate agreement that we need to do?
So repair these cells, what we plan to make the LFP prismatic cells. These cells -- electric vehicle application or for industrial application. The cells we are planning to make 4 types of cells, and these cells have applications on both automotive side and investment side. So certainly, we have plans of using SVOLT cells and technology for industrial applications also.
Okay. And sir, is there any restriction from SVOLT side for tapping some export opportunity if you're either directly exporting or supplying to OEMs who export that vehicle?
So this is the technology collaboration agreements. Normally, we have a territory clause, but there is no blanket ban or something. It is -- the agreements normally allow both the parties to discuss mutually and take a call on a case-to-case basis.
Okay. And sir, final question on SVOLT. So now, do you think also earlier I mean our impression was bold and Exide partnership with exclusivity. But do you think that the way things are progressing at a rapid pace, EVs are ramping up? Do you think that SVOLT can potentially partner directly with an OEM or it has to go via Exide only?
I think. These are final aspects of the agreement, which is not in the public domain, Aditya, and I would not like to make a comment on this at this point in time.
The next question is from the line of [ Apurva ] from Whitestone Financial Advisors Private Limited.
Sir, I have one question regarding the lithium-ion cell manufacturing plant. What is the asset turnover we are looking for this plant?
Mr. Mukherjee will answer this question.
Yes. As I said earlier also, because this absolute number is very difficult to give now because first thing we have just constructing the plant and then you have to start with the commercial production, then stabilization process. And then when we reach the full cap utilization, all these questions from, but it also depends on the commodity prices at that point of time. So very difficult to answer now. As I said that there is some outlook on the margins we can expect and the full capacity utilization, but I think closer to those debt, we can give more clarity on the return on capital or the asset turnover.
So with some ballpark number like, for example, fitting the price, which is going as of today, maybe. So like what number do we come at for maybe the revenue potential asset turnover. Just to give me like some numbers in the mind.
It will be more of a theoretical in each because there is -- I don't think the situation will remain at the same level. So I think it's more realistic to be closer to the date. Actually, at this moment, for lithium-ion, there is no industry benchmark in India, possibly, that's why you're seeing all of you are struggling. But once the capacities come up, you'll also have an industrial benchmark so that you can compare who is better than who and things like that. We are also being -- that is the kind of a disadvantage of being the first, but we'll be able to give you more color going forward.
Okay. Okay. And sir, my next question is regarding like as mentioned that around INR 5,000 crores is required for the sales, right? So out of that, like how much is from internet approvals and how much we have taken from loan?
Yes. As of now -- our outlook is -- we have already invested INR 2,000 crores. And as I said, that we are quite confident enough to finance this project from our internal accrual. Without compromising anything, any investment requirement for the core business. And -- but we cannot finance it at one go. So there will be some bridge loans. And which we are confident to repay over a period of time. And so out of total INR 5,000, we have already invested INR 2,000 crores in the last financial year. And going forward also, we are continued enough to infuse capital depending on the cash flow situation.
Okay. So most will be from maintenance accruals, remaining INR 3,000 would be, right?
From internal accruals, but the cash flow doesn't happen like it happens over a period of time, cash inflow. And -- but we cannot delay the project just waiting for the cash flow to happen. So we do take some loan just to fill that gap and which -- that will be, of course, in the subsidiary EESL books bridge loan. And depending on the cash flow situation from the core business, we can increase further capital and the loan can be repaid from there.
Okay. Okay. And sir, my last question is on the lead acid battery side. So what percentage do we sell in aftermarket?
So the aftermarket share is at this moment, about 75% of the total automotive trade business, 25% being roughly from -- 20% from being an OEM and about 5% from exports. That's the split. It has reduced over this quarter. Yes.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Yes. So thank you, everybody. Thank you for your participation. It was very engaging and encouraging to answer to all your questions. I hope we have been able to answer the questions satisfactorily. However, if you have any further questions or would you like to know more about the company, we would be happy to be of assistance. So please get in touch with us. Thank you.
Thank you, members of the management. On behalf of Investec Capital, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.