Exide Industries Invests Rs. 100 Crores in Wholly Owned Subsidiary Exide Energy Solutions

Team Finance Saathi

    17/Dec/2024

What's covered under the Article:

  1. Exide Industries invests Rs. 100 crores in Exide Energy Solutions, a key step for expansion in the EV battery market.
  2. Investment through rights issue maintains Exide's 100% shareholding in Exide Energy Solutions.
  3. Exide Energy Solutions focuses on manufacturing lithium-ion batteries for electric vehicles and stationary applications.

Exide Industries Limited, a leading manufacturer in the Indian automotive battery sector, has recently announced a strategic investment of Rs. 99,99,99,972/- (approximately Rs. 100 crores) in its wholly owned subsidiary, Exide Energy Solutions Limited (EESL). This investment is made through a rights issue of equity shares, which is part of Exide's broader strategy to reinforce its position in the fast-growing electric vehicle (EV) battery market. The investment will enable EESL to continue its ambitious plans to develop and expand its lithium-ion battery manufacturing capabilities.

Exide Energy Solutions: A Growing Player in the EV Battery Market

Exide Energy Solutions was incorporated on 24th March 2022, and it specializes in the manufacturing and sale of lithium-ion battery cells, modules, and packs for electric vehicles and stationary applications. This is a key segment of the green energy revolution, as lithium-ion batteries are critical to the electric vehicle ecosystem in India. Exide Industries has already invested significantly in EESL, totaling Rs. 3152.24 crores up until this recent investment, which indicates the company's strong commitment to sustainable energy solutions and its forward-thinking strategy in the electric vehicle sector.

The company's focus on lithium-ion technology is particularly noteworthy as the Indian market for electric vehicles is expected to grow exponentially in the coming years. With the support of this fresh round of funding, Exide Energy Solutions plans to set up a greenfield plant in Bengaluru. This plant will be a cornerstone for battery manufacturing in India, aimed at meeting the increasing demand for EV batteries. The Bengaluru plant is part of Exide's broader vision to help India transition to more sustainable energy solutions, a process that is already underway with the growth of EV infrastructure across the country.

Investment Structure and Financial Details

The rights issue issued by EESL involves the allotment of 2,77,77,777 equity shares of Rs. 10/- each at a premium of Rs. 26/- per share. This totals the investment amount of Rs. 99,99,99,972/-. With this additional investment, Exide Industries' shareholding in EESL remains unchanged at 100%, ensuring that Exide continues to maintain complete control over the subsidiary. The investment is part of Exide's strategy to fund the greenfield project and cover various operational expenses, as the company continues to expand its battery production capacity to cater to the growing demand in the electric vehicle market.

No Change in Control or Promoter Involvement

As per the disclosure, this transaction does not fall under related party transactions as Exide Energy Solutions is a wholly owned subsidiary of Exide Industries. Furthermore, the investment is made at arm's length, meaning it was conducted under market conditions, ensuring fairness and transparency. Exide’s promoter group and group companies have no direct financial interest in the transaction beyond what has been disclosed.

EESL's Recent Financial Performance

EESL has seen significant growth in recent years, with its turnover for FY 2023-24 recorded at Rs. 239.14 crores, a noticeable increase from Rs. 112.05 crores in FY 2022-23. This growth is primarily attributed to the merger of Exide Energy Private Limited (EEPL) with EESL. Despite this growth, the company reported a loss after tax of Rs. 149.45 crores for FY 2023-24, largely due to its ongoing expansion activities and the initial costs associated with the development of its manufacturing facilities.

Impact on Exide Industries and the EV Sector

This move by Exide Industries is expected to play a significant role in the company’s long-term strategy, particularly in positioning itself as a key player in the electric vehicle battery market. The Indian EV sector is set to experience massive growth, driven by the government's focus on reducing carbon emissions and encouraging sustainable energy sources. With Exide Energy Solutions leading the charge in battery manufacturing, Exide Industries is poised to benefit from the upcoming demand surge for lithium-ion batteries used in electric vehicles.

This strategic investment comes at a time when India is accelerating its adoption of electric vehicles, and companies involved in battery manufacturing are likely to see exponential growth. With Exide Industries firmly backing its subsidiary, Exide Energy Solutions, the company is well-positioned to capture a significant share of the EV market in India, which is expected to grow in double digits over the next decade.

Conclusion

Exide Industries’ continued investment in Exide Energy Solutions highlights the company’s focus on sustainable energy and its long-term commitment to being at the forefront of India’s electric vehicle revolution. As EESL expands its manufacturing facilities and product offerings, Exide Industries is not only strengthening its foothold in the EV sector but is also contributing significantly to India’s green energy transition.

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