Exide to enter lead smelting business

The board of Exide Industries, the largest manufacturer of lead acid storage batteries in South Asia, today decided to enter the lead smelting and recycling business in India through strategic alliances with local smelters that may also involve equity participation.

The company is holding talks with some smelters. The move may help insulate the company from fluctuations in the prices of lead, the main raw material used in lead acid batteries.

The board has empowered the management to select a local smelter and pick up equity in the company with an investment of Rs 25 crore.

T V Ramanathan, managing director and CEO of Exide, said, "Such an acquisition would be a significant step towards enhancing the amount of recycled lead and lead alloys used by the company."

He added, "In a scenario where the price of lead has been highly volatile, having an equity stake in a local smelter would be a significant step towards increasing the reliance on domestic sourcing of recycled lead."

P K Kataky, the director of the automotive business of Exide, said, "This would open up an opportunity for the company to enhance the volume of scrap battery collection from the dealers "" a battery handling and management rules (regulatory) requirement."

Exide had launched a pioneering initiative to collect scrap batteries as required by the regulatory framework.

Exide recently decided to raise Rs 150 crore through a rights issue of shares, aimed at augmenting long-term resources.

Exide had lined up a capex of Rs 400 crore for the next three financial years.

Ramanathan said Rs 185 crore would be invested in the financial years for debottlenecking of plants to meet robust market demand.

While the top line growth was satisfactory, margins were a challenge, he admitted.