Exide Industries, the leader in lead-acid batteries for automobiles, is set to give a major push to lithium-ion technology with plans to invest close to Rs 1,000 crore in its upcoming facility at Gujarat.

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Targeting the emerging electric vehicles market, Exide had last month tied up with Swiss entity Leclanch for making batteries having lithium-ion cell technology at its plant that is expected to become operational by mid-2020.

The company would also be investing in producing batteries that consume less lead, using technology sourced from Advanced Batter Concepts of the US. These product lines would help Exide in reducing its dependence on conventional lead-acid batteries which have been suffering from intense competition from rival Amara Raja as well as from the vagaries of lead price fluctuation that has been impacting its margins and bottomline.

“We would be investing about Rs 1,000 crore in the Gujarat plant over time. The facility which we acquired from Tudor India is being transferred in favour of the joint venture. Initially, we will procure cells until we get a viable volume. If we produce the cells of lithium-ion batteries, then it would require an investment of about Rs 800 crore initially,” managing director Gautam Chatterjee said on the sidelines of the annual general meeting of the company.

Chatterjee sees a pick-up in the demand for lithium-ion batteries, primarily from the government for powering state-owned transport infrastructure like city buses.

“We are also working on the bipolar (Greenseal) technology that would reduce lead consumption by around 30%, using technology sourced from Advanced Battery Solutions. This is an absolutely disruptive technology and we are yet to decide where to produce them - in Haldia (in West Bengal), where we are expanding our facility, or in Hosur (in Tamil Nadu),” Chatterjee said.

The Greenseal technology licensed to Exide claims to increase battery life by about 300% compared to standard lead batteries and re-charges twice as fast.

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“Lead accounts for about 40% of total cost of a battery. By using bipolar storage batteries, we can bring down the cost by about 10%, which would be significant,” Chatterjee said

In the first quarter, Exide’s operating margin has contracted by 140 basis points to 14.1%, primarily because of higher prices of lead, a part of which is imported.

In Haldia, the expansion project would take place over 20 acre adjacent to its existing plant. A battery recycling plant, which would extract lead from used batteries, would be constructed over another 20 acre located nearby. In the current fiscal, Exide’s capex would be Rs 1,100 crore in its planned facilities, Chatterjee told shareholders.