Proposed at investment of Rs 260 crore, the plant would produce 15,000-tonnes-a-month of lead and lead alloys at about Rs 1.75-lakh-a-tonne, generating Rs 3,150 crore a year
Spiraling prices of lead, the key raw material for making batteries, have forced market leader Exide to go for setting up a new lead smelter for recovering the metal from waste batteries at Haldia in West Bengal.
The largest lead-acid storage-battery manufacturer in India has a 100% subsidiary Chloride Metals that runs two lead smelters, at Khed in Pune, Maharashtra and at Kolar in Karnataka.
These are integrated facilities which extract lead from exhausted batteries and then manufacture and supply recycled lead and lead alloys, valued at about Rs 1,425 crore in FY17.
The subsidiary has now applied to the central government for setting up its third smelter at Haldia.
“The basic purpose of the project is to set up an industry which would be unique of its kind, with the best available technology in secondary lead smelting industry. The technology would be shared from Engitec Technologies SPA of Italy,” Exide has told the government while applying for the project, adding that the technology has been mentioned as one of the best available in a document issued by the Secretariat of Basel Convention.
Proposed at an investment of Rs 260 crore, the plant would produce 15,000-tonnes-a-month of lead and lead alloys at about Rs 1.75-lakh-a-tonne, generating Rs 3,150 crore a year.
Lead and its alloys take up 70% of total material value in an automobile battery.
Exide procures 30% of this requirement through imports or import parity-pricing based on London Metal Exchange (LME) quotes while the balance 70% is procured locally.
Even though LME lead prices went up 13% last fiscal and then another 25% since May, just about 30% of Exide’s business with original equipment makers like auto companies have ‘lead price variation clause’.
“This portion of the business is protected from price volatility. Balance 70% of the business to retail customers is exposed to price volatility, the risk of which is reduced to an extent by increasing the usage of recycled lead,” the company's FY17 annual report said.
After Exide came out with a poor set of numbers, Prabhudas Lilladher has said continued rise in lead prices would be a drag on margins.
Despite strong revenue growth of 23% on year to Rs 2,371 crore during the second quarter, Exide reported a significantly weak operating performance.
The Kolkata-based battery maker’s margins on earnings before interest, tax, depreciation and amortisation contracted 250 basis points to 12.5%.
COST CONTROL
- Lead and its alloys take up 70% of total material value in an automobile battery. Exide procures 30% of this requirement through imports; the balance is procured locally
- Just about 30% of Exide’s business with original equipment makers like auto companies have ‘lead price variation clause’
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