Exide Industries Limited (EIL) has taken a significant step in enhancing its presence in the electric vehicle (EV) market by acquiring Exide Energy Solutions Limited (EESL), a wholly owned subsidiary established on 24th March 2022. This acquisition is a crucial part of EIL’s strategy to bolster its lithium-ion battery production capabilities, catering to the rapidly growing demand for electric vehicles and stationary applications.

Overview of EESL

EESL is primarily engaged in the manufacturing and selling of lithium-ion battery cells, modules, and packs tailored for India's burgeoning electric vehicle market. The company’s financial details reflect a strong foundation for growth:

* Paid-up equity share capital: ₹995.88 crore

* Net worth: ₹1,981.56 crore (as of 31.03.2024)

* Turnover: ₹239.14 crore for FY 2023-24

* Loss after Tax: ₹149.45 crore for the year ending 31.03.2024

Despite facing challenges, EESL is poised for future growth, with a total investment from Exide Industries amounting to ₹2,852.24 crore, which includes investments made in the erstwhile merged subsidiary Exide Energy Private Limited (EEPL). This backing demonstrates Exide's commitment to the long-term success of EESL.

Related Party Transactions

The acquisition falls within the realm of related party transactions since EESL is a wholly owned subsidiary of Exide Industries. EESL has recently allotted 2,77,77,777 equity shares at a premium of ₹26 each to EIL, amounting to ₹99.99 crore. This transaction is executed at "arm's length," ensuring fairness in the financial dealings.

Industry Position and Objectives

EESL operates in the advanced battery manufacturing sector, focusing on various battery form factors, including cylindrical, pouch, and prismatic batteries. The acquisition aims to support the setup of a greenfield plant in Bengaluru dedicated to producing lithium-ion batteries, thereby meeting the rising demand in the EV sector. This investment not only reinforces Exide’s shareholding in EESL but also positions it as a key player in India's electric mobility transition.

Financial Projections and Future Prospects

The projected turnover for EESL over the last three years highlights its growth trajectory:

* FY 2021-22: ₹0 (as it was newly incorporated)

* FY 2022-23: ₹112.05 crore

* FY 2023-24: ₹239.14 crore

These figures illustrate a promising outlook for EESL, suggesting potential for substantial market share in the future. With Exide’s backing, the expectation is for EESL to leverage technological advancements and increase production efficiency.

Conclusion

In summary, Exide Industries' acquisition of EESL signifies a strategic move to enhance its operational capabilities within the electric vehicle battery sector. The investment not only solidifies EIL's commitment to sustainable energy solutions but also sets the stage for future growth and innovation in battery technology.

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