Exide Industries Ltd (NSE: EXIDEIND) Q4 2025 Earnings Call dated May. 06, 2025
Corporate Participants:
Unidentified Speaker
Avik Roy — Managing Director and Chief Executive Director
Analysts:
Unidentified Participant
Aditya Jhawar — Analyst
Pramod Amthe — Analyst
Vibhav Zutshi — Analyst
Kapil Singh — Analyst
Mohit Jain — Analyst
Sonal Gupta — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the earnings update conference call for Exlight Industries Limited Hosted by Invesec Capital Services India Private Limited. As a reminder, all the participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aditya Jawar from Invesec Capital Services India Private Limited. Thank you.
And over to you sir.
Aditya Jhawar — Analyst
Yeah. Thank you. Good afternoon to you all from Excite Industries. We have with US MD and CEO Mr. Avik Roy. Director of Finance and CFO Mr. Manoj Kumar Agarwal. President and Company Secretary Mr. Jeepinder Kumar. Before we proceed, here is a disclaimer for the call. Few statements by companies management in the call will be forward looking in nature and we request you to refer to the disclaimer and earnings presentation for further details. We will start the call with a brief opening remark from the management followed by Q and A session. I would now like to hand over the call to Mr.
Avik Roy for opening remarks. Thank you. And over to you sir.
Avik Roy — Managing Director and Chief Executive Director
Thank you, Aditya. Good afternoon ladies and gentlemen and a warm welcome to you all for the Excite earnings call. At the outset let me take this opportunity to welcome Mr. Manoj Aghazarwal on board as the new Director of Finance and CFO of Excite. He takes over from Mr. A.K. mukherjee who after a long stint of 18 years has retired from the position of Director Finance and cfo. Manoj had been with us for the last two years. He joined this company as a Deputy CFO and through a routine succession planning now he is on board as the Director Finance.
So I welcome Manoj on board. I will take you through the key highlights of our performance for the last quarter and the fiscal year 25. During the fourth quarter nearly 75% of our business, nearly 3/4 of our business has registered double digit growth even on a high base. Within these mobility aftermarket solar IUPS businesses continue to contribute to strong growth. Remaining 25% of the business witnessed a decline in revenues impacted by a weaker demand scenario in businesses like auto OEMs, telecom and home inverters. This led to an overall modest 4% sales growth during the quarter though on a high base.
However, if you notice that on a quarter on quarter on a sequential quarter basis we have grown 8% in Q4 also in quarter four. I’m happy to inform you that we exported the first batch of our advanced AGM batteries for applications for exports. Market operating profitability was impacted due to high input cost in the quarter on account of a considerable increase in the cost of antimony which is one of our major alloying elements in lead acid battery chemistry. And on top of that we had some write off of certain slow and non moving operating assets.
Prices of antimony have massively surged in the last six months thereby impacting profitability margins both on year on year and quarter on quarter basis particularly. However, EBITDA in absolute terms has increased by 4% on a sequential basis. Even cash flow from operations at a pre working capital increase level has sustained at the last year’s level. Before I move to annual performance, let me talk briefly about the economy and the industry dynamics. While the GDP growth of India subsided from 8.2% in FY24 to an estimated value of 6.4% in FY25, the manufacturing growth has further slipped from 8% in 24 to almost estimated 3.4% this year.
This signals a slowdown in manufacturing activities. Domestic auto replacement demand was robust throughout the year while the OEM demand from automotives were muted especially in passenger vehicle segment. In reserve power. Both industrial UPS and solar trade markets witnessed steady growth in demand, but home inverter market remains soft with its demand expected to pick up in Q1 of FY26 which is the current quarter. Government spending and capital outlay have decelerated in key sectors like railways, power and infrastructure over the last couple of quarters. Automotive batteries continue to perform well in exports, but demand for industrial batteries which has been a major stay for us in European markets.
They have been impacted by the ongoing slowdown and recession across EU markets and this is pre tariff era. This is last fiscal year I’m referring to with this context. The annual performance mirrored that of the fourth quarter with around 70% of our business performing strongly while the rest experienced some demand headwinds. EBITDA margins were marginally impacted due to higher raw material prices as I mentioned and lower than expected growth in a few business verticals. However, I would like to highlight that despite the tough macro environment, our performance has shown signs of resilience. Our balance sheet still remains very strong with zero debt and high cash flow generation.
As we enter FY26, the outlook for the lead asset business remains positive across most business verticals. I believe that Excite with its advanced product portfolio and Pan India distribution network and a strong strong brand recall will continue to benefit from the growth opportunities during the year we have strengthened our business and the go to market strategy by transforming from a SBU led organization to a functional organization. We have also strengthened our senior leadership team by bringing in business leaders from global corporations. Apart from this on operational front we have undertaken multiple initiatives on cost excellence and upgrade of manufacturing technology.
For example, we moved a substantial part of our two wheeler manufacturing capacity to punch grid technology in Q4 itself. All such initiatives have started delivering results and we will continue going into the next year. Moving on to the lithium and cell manufacturing project, we have invested nearly 1000 crores in FY25. An additional 300 crore equity has already gone in the month of April to ESL our 100% subsidiary. With this the total equity investment in XAI to date is 3602 crore. Construction works are progressing well and project is expected to start commercial production in the current year.
We have a range of commitments secured ranging from MOUs to packs in production to co investments in line with leading E2 Wheeler, E3 Wheeler and E4 Wheeler OEMs. And with this I close my opening remarks. We will now be happy to take your question over to you Aditya.
Questions and Answers:
operator
Thank you sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Pramod Amte from incorrect equities. Please go ahead.
Pramod Amthe
Yeah hi. Thanks for taking the questions. So the first question is you had called out home invalter. There has been a weakness. Do you think this is more short term or any structural changes you feel are the challenges there?
Avik Roy
So thank you Pramod. Let me give you the context. One is internal and the other one is external market driven. So in erstwhile our home inverter business was sitting under our SBU automotive. So it was mainly a part of the automotive SBU though it’s a non automotive business. So it was a major portion. So our only go to market was with the automotive network. Now we have separated reserve power and mobility with the new organization system. So now mobility is going to build its sorry reserve. Our home inverter is going to build its own network and that work has started from Q2 once the organization changed and they have been getting success because we are now expanding independently in their own network.
And not relying solely on the automotive network like in the past. So this is a go to market shift for which we have readjusted the organization and therefore both the mobility as well as the home inverter. Both these business verticals will benefit because now they will ride on their own strengths and not rely on each other’s network. So that was a very conscious decision which we took on the market side, on the demand side. Yes, we had some early onset of monsoons, so the peak season we missed out. However, if I look at my last two weeks, last two months performance, I see that it is coming back, which gives us a hope that Q1, which is the peak season right now, is going to be a strong season for inverters.
So this year inverter growth is a key element of our growth agenda. And I can tell you some of the actions which we have taken, new actions we have taken in the last quarter or so. Now we are entering new white spaces which we had never had to do in the past. For example, we are entering the white goods space now with our complete inverter systems as well as inverter batteries. We are launching RP Home. If some of you have noticed, we have launched this RP Home series targeting the home UPS systems through this new channel.
So these are the few go to market initiatives with which we are confident that we will get back to the position where we are in the growth path. By the way, we are still the leading manufacturer of a leading number one in inverter batteries in India, despite the decline.
Pramod Amthe
Sure, thanks for the detailed answer. So the second one is with regard to EV cell manufacturing, considering that you might be approaching the OEMs or other parties for the same what is type of cell formats you are getting a better traction with and how are you planning capacity distribution for these cell formats as you build capacity? That’s one. And second, any development on Hyundai MOU which you assigned.
Avik Roy
So let me take the first one. You know we are probably the only one that we. When we started this project we tried to mitigate the risk through multiple chemistry and multiple format method. So we have two lines of cylindrical and two lines of prismatic and all these are which means two lines of NMC and two lines of LFP as well. So we see traction on both sides from different end markets. We have been in advanced discussion with two of the leading OEMs for two wheelers on the cylindrical side and similarly on the three wheeler side.
We are talking to some people on the LSP side at a very advanced stage. So Also, you know, LSP Prismatic is helping us to address the stationary market. So I think we are in a reasonably safe position because the entire project is going on parallel. Maybe the production will start one month in advance of the other or two months in advance of the other. But still the investment has been made in all the four lines together. So that’s why we are not too worried about finally where the volume of tech will shift because we’ll be able to cater to all use cases.
Pramod Amthe
Sure.
Avik Roy
And the last question was on Hyundai. I think whatever you see in the public domain, whatever we have announced regarding the binding agreement, that still stands. As I said, it’s in active stage where we are putting up all the resources to get ready. The product development has started and we’ll soon come out with additional information in public domain.
Pramod Amthe
Sure. Thanks in all of us.
Avik Roy
Thanks a lot, Pramod.
operator
Thank you. The next question comes from the line of vaibhav Suchi from JPMorgan Chase. Please go ahead.
Vibhav Zutshi
Yes, thanks for taking my questions and best wishes to Mr. Manoj for the new role. My first question is on the lithium ion business. Could you just elaborate the range of commitment that you mentioned with respect to the customers and if there are any piddings on the plant side? Because initially we had anticipated completion by the end of FY25. And I think the project cost for the first phase is almost 5,000 crores. But the investment right now is around 3,600 crores. So yeah, I mean just sense on the range of commitments and when do you expect the SOP would be great?
Avik Roy
Okay, so there are three questions. One is on the commitments with the client. The other one is timelines. And third one is a detail on investment. Right. So let me start with the timelines first. As I said, if you recall in the last analyst call, we already said that we will be ready with commercial production within this year, which means FY26. Earlier of course we planned for FY25 or we announced FY25. But then, you know, there were serious problems on visa issues and things like that. Geopolitical issues which we overcame very quickly. We are lucky to have overcome that.
And now we have more than 100, I mean 130 to 150 Chinese engineers in the shop floor, you know, commissioning all the equipment, including people from our technology partner. So that’s why we said we will start the production or the trial production within this calendar year. And then we will need some time for homologation with the OEMs. You know, how the Process works because your design validation is done by the OEMs on the prototypes and which has been done already. But now once you start your serial production from that production line, they will pick up volumes and put it in their vehicles and run homologation process for about four to five months.
And then the real volume, the commercial serial production starts. So this is a standard process which we are following for lithium also. This we followed for lead acid in the past also. And therefore even if I start the trial production of the commercial line, start of production happens in month zero, likely in month four or five the serial production will start because that time we will recover for homologation. So that is how we are. We have decided on the timelines more or less. And also all four lines will not be commissioned together one after the another.
We’ll start with the cylindrical NMC line which is meant for two wheelers for which we have here in advance discussion with many of the clients. So that will be our first priority and then take it one by one then possibly then the next one will be one line of LFP Prismatic targeting three wheelers and four wheelers. So this is how we are planning regarding the commitments as I said, I mean all I can tell you is that it’s in multiple stages. For some we have already started pack manufacturing but we will convert to our own sale.
Now the pack manufacturing is happening through outsourced sales but the moment we are ready with our own sales we will shift to our own sale and manufacture the pack. With some we are at MOU stages where core development and design validations and things like that are happening. And with hum, we have a binding agreement as we have already mentioned which you know it’s in public domain. So there are three types of arrangements which are engagements we are having with customers right now. Good to see that at least the largest 2 Wheeler OEMs, 3 Wheeler OEMs and some of the 4 Wheeler OEMs are engaging with us because they see a value in sourcing local films.
Does that answer your question?
Vibhav Zutshi
Yeah, yeah, that’s very interesting. Just a follow up, can you like tell the number of customers, you know like 5, 10, 15 that you’re engaging with? And I mean given that sell prices in China now at least LSP is around $55 per kilowatt hour. Just the fact that you mentioned that we still see value in cell manufacturing in India. Like I mean what would be the cost side? Yeah.
Avik Roy
Please excuse, I may not be able to tell you the number of customers because the EV OEMS are so few it is easy for you to crank the name which will not be there for them. So all I can tell you see today the government is incentivizing cell imports and disincentivizing pack and module imports, right? So which means government is incentivizing that import cell from China and make the packs and modules in the country. But that’s not going to be the future. There has to be. Once the domestic manufacturing capacity of cells are in place, government has to switch the priority on incentivizing local cell manufacturing.
Otherwise this industry will never grow in India. In the current structure do you feel that the industry will grow? That if you incentivize you put only 5% import duty on sales and only make the module impact then India will miss the bus for capability building in cell manufacturing forever. It’s not only us, it’s for everybody. But at this moment, since the demand is more than the supply of cells and since we will be the first one to start in a giga scale, I think till that time this environment will stay where cell import gets incentivized and pack import gets incentivized.
But once we have a domestic capacity of cell manufacturing and particularly high quality giga scale, I’m sure even the government will switch the priorities. And that is what I get to hear from various forums. And then the discussion will be different discussion. Then it will be more of how you can deliver large scale large volume sales to the OEMs at, you know, at market prices. So that’s my short answer.
Vibhav Zutshi
No, very helpful. And this last question if I may squeeze in on the lead asset side. You mentioned that antimony prices are rising sharply. Can you just sell the contribution in the raw material basket? Because we know lead, plastics and sulfur is the major contribution. So I mean how would the rise in antimony prices really impact margin going forward? Thank you.
Avik Roy
Two questions. One is what is the impact of antimoney currently and what will be the impact in the Future? So in Q4 we had a negative impact of about 50 crore in absolute value due to purely due to antimoney. And this is net of the, you know, price increases which we have announced to the market. The problem was this anti money was rising so sharply from $11,000 it went up to $16,000 per ton in the same quarter. Our by the time we announced our price increases it has further gone up. By the time we announced our second increase it has further gone up.
So therefore we did not, we could not recover everything. So net, net we had 50 crore of downside impact on on Antimoney itself in Q4 going forward and we have seen that in the initial comments I have said that there are two elements one is antimoney and the other is also some write offs of some non moving operational assets. So if I do the math and if I add this back we were at a very good EBITDA margin level even in Q4 we were actually close to 13%. So now how do we mitigate that? First of all this one time write offs will not come back.
Secondly, antimoney we have taken a price increase from mid February we took a 1.5% in March 1st we take another similar amount and from the 1st of April again we have announced so we are passing on the increase to the market regularly In April anti money prices have somewhat stabilized so we’ll get a value of this increase but then it is always lagging because it is continuously increased. And I’m sure you know the reason for this. This is a geopolitical reason and this had started much before the tariff war and this is just because China decided to ban exports of antimini because of national security issues and therefore the prices started shooting up.
China produces about 40% of global antimoney production and one of the largest application of antimoney is also in military which is bullets. So there are a lot of geopolitical and military consideration that China has decided not to export antimoney. We are the collateral, what should I say? We got damaged the battery industry. However, as of now we have to only pass on the pricing cost increases to the market and some of our customers even with whom we are indexed on lead they appreciate that this non lead increase is also a reality. They also track the international market and we have been able to convince a lot of them for price increase including institutional customers.
So that’s the answer on Bantimani current and future.
Vibhav Zutshi
Okay, thank you so much.
Avik Roy
Thank you.
operator
Thank you. The next question comes from the line of Aditya Jawar from Investec Capital. Please go ahead.
Aditya Jhawar
Thank you. Continue with this question of anti Money. What is the extent of price increase left to pass on the. You know, the incremental increase.
Avik Roy
So Aditya, thank you. It depends on at what level you are pegging the antimoney price. So if I look at the current price levels of $60,000, 60, $62,000 average I think we are more or less covered.
Aditya Jhawar
Okay, okay.
Avik Roy
With the increase of from 1st of April which we have announced, yeah, we are more or less covered but going forward we do not know to what extent it will move again. So that is the answer to your question.
Aditya Jhawar
So second question is what is the can you quantify the write off that you have taken in this quarter?
Avik Roy
Yeah, it’s about 25 crores.
Aditya Jhawar
25 crores. Good. Sir, on continuing with the margin question now we are doing a lot of cost saving initiative and there is a tech upgrade with concrete casting as well as pancred as you know if you can help us understand that how should we think about our margin trajectory in the next couple of years because when we benchmark ourselves with Amaraja, a competitor profitability is much lower. So if you can throw some light whether on tech upgrade cost, saving, warranty cost, what are the drivers of margin expansion and how should we see genetic play out in the next two years?
Avik Roy
Yeah. Thanks Aditya. So first of all as I just now mentioned even in quarter four if you add back this effects, negative effects which I said we are already close to 13% we have done that massage and this mainly came because we switched over to Punch creed for motorcycle for two wheelers in the month of January. And that has given us three major benefits. One is on the material cost, secondly with the level of automation this Punjab lines have we have a lot of impact on the manpower cost on the ground. And third which I personally feel is the most significant impact is the improvement and consistency in quality.
So this is majorly going to impact our has started benefiting our internal rejections, our warranties and that we are monitoring. And this is I think the most significant long term impact. So it has now. But we invested for only 50% of the capacity last year. So having seen the benefit coming in once you know half of the capacity shifted to punch grid we immediately made a capital investment for the remaining portion which will come on live around let’s say November of this month with the machines coming in and commissioning and everything. So from November onwards Even the balance 50% will also go into Punjab.
So whatever benefit we are getting on 50% of the volumes we’ll get on 100% of the volumes. And motorcycle is our one of our key growth driver and margin driver going forward. So this is on the punch grid. We have similarly invested in continuous cutting process which we are, I think we are the first one in the country. We have done it through collaboration with our partners in USA East Penn. And this has also given us huge impact on positive, positive impact on quality as well as benefit of the cost. That machine has also started running from March and again this was one line we converted first and with the success of that we have also decided to invest on the subsequent lines.
Another two lines we have invested, decided to invest which will also come maybe end of this calendar year. So these are the actions we are taking on the cost margin improvement agenda. Now this takes time. For two years we have been only maybe one and a half years we have been running pilots on these machines because we wanted to invest in one line, run, pilot, polish our hands and then horizontally deploy. And that is why this was taking time. But the results of the pilot trials have been extremely positive and we are very happy that we will be able to drive.
So this is one of the examples of our margin agenda improvement agenda. There was one more question which I am missing out. Aditya, can you repeat
Aditya Jhawar
the warranty cost? I think you covered it.
Avik Roy
I covered, yes, warranty covered.
Aditya Jhawar
Yeah, yeah.
Avik Roy
We are trying to address this problem through manufacturing technology because most of the warranty issues which we face was from manufacturing inconsistencies at large scale which we are trying to move to automation. Like I mentioned just now,
Aditya Jhawar
my second. Question is on the lithium ion business. Now looking at the decline in the prices of LFC NMC globally, what is your assessment in terms of what could be the profitability and ROC of the project now? And also now you are engaging with customers. You are getting a sense that who is looking for cell, who is looking for a battery pack. So if you can give a ballpark range that what could be our margin, EBITDA margin expectation and ROC maybe at about say 50% utilization, what should we expect? And about 100%, what should be that number?
Avik Roy
So Aditya, at this stage I think it’s a bit too early to comment on EBITDA margins. Our focus is to get into customer contracts, run complete the whole location process and scale up the production. Once we reach about 80% utilization, which means in phase one, about 4 gigawatt hour, 5 gigawatt hour of utilization, that is the time when we will, you know, start getting a view on the returns. Because it’s quite possible that Once we reach 80% of utilization we might observe that no, we need to put up some more capacity immediately to get faster breakeven.
You see what I mean? So at this moment we have said that we’ll not to go for more than 6 gigawatt hours plus the Hyundai contract will kick in. And once these are all in line, let us reach about 80% of utilization, ramp up as fast as possible in 12 years time and then we will see on our returns. Simple reason, unlike lead acid and this is a Global standard. You will know for first couple of years, typical cell manufacturing plant has huge amount of internal rejections as well as yield losses. You may have heard from other players in China or any other places.
So first two years we have to improve our manufacturing process maturity which means reduction of our internal scraps and improving on our yield. Once we do that, our manufacturing cost, manufacturing efficiency will reach a level which today we cannot imagine. Today while calculating our returns, we are factoring all these kinds of waste agents. You know, double digit scrap, high single digit, you know, yield loss. So this, this we’ll only see after 12 years when the manufacturing process matures. And this is not only for us. Every manufacturer has to go through this learning curve. And once that 12 year cycle is over and we reach maybe 80% utilization level, we’ll be in a much better position to recalculate our returns and the timelines of that.
Aditya Jhawar
Sure sir, that’s very helpful. That’s it from my side. Thank you.
Avik Roy
Thank you Aditya.
operator
Thank you. A reminder to all participants, please press star N1 to ask a question. The next question comes from the line of Kapil Singh from Nomura World. Please go ahead.
Kapil Singh
Hi, can you hear me?
Avik Roy
Yes.
Kapil Singh
Good afternoon. Thanks for taking my question sir. On the growth side, if you could give some thoughts. Last year was a little bit tepid on growth. We had roughly about 4% growth for the lead asset business. So if you could just share some thoughts on why the growth was low and what are the initiatives you are taking and what kind of growth to expect for next year?
Avik Roy
Yeah. So is your question focused on quarter four or full year? So I have mentioned, like you have heard in the previous calls or the previous releases also you know, if I break down our growth, overall growth into our segments. So let me give you a color. 4 Wheeler Aftermarket. 4 Wheeler Aftermarket contributes to about 25 to 30% of our sales. So that has grown by double digit full year. Solar, Solar business has grown substantially every quarter to almost 25%, 27% growth. This has been a very strong year for solar. And now they have, they’re planning to build 10001200 crore kind of a franchise out of solar business alone for the next year.
Two wheeler aftermarket. Two wheeler aftermarket. In the first couple of quarters we did very badly because we were almost starving the market because of shortage of supplies. Why? Because we were moving over from this conventional car plates to punch grid plates. So there were a lot of transition happening in the factories and therefore we were almost starting the trade Market because we could not stop supplies to our OEM commitments. So credit market was suffering. So first two quarters for motorcycle batteries, two wheeler batteries has been very big. Overall we have grown by just touch double digit for motorcycles.
But if you look at quarter on quarters, I can give you first quarter we were 2%, second quarter we were plus 6%, third quarter we were plus 10% and last quarter we grew by 18%. So as the supply improved quarter on quarter after this punch grid was commissioned, if you see the motorcycle growth rate has now gone from 2% in Q1 to 18% in Q4. So therefore we have taken a very aggressive plan for next year also on motorcycle growth now that the lines are operating. And so this is, this is how it is. Our auto exports, Auto exports also jumped because there were many white spaces, we hardly have any market share.
And it also grew by, you know, close to 25 to 30% full year. So these are the. So I would say if you look at complete mobility, complete mobility full year, they contribute to about, let’s say 1/3 of our business, 35 of our business. So it’s almost grown by 15%. Both put together four wheeler and two wheeler on the infra we had a drag mainly because of, you know, telecom itself we lost. Telecom was almost minus 25% to 30% because of very high base in the previous year because the 5G rollout happened in FY24 when there was a boom of towers.
And then that 5G boom went off in December 23rd. And then from then on the telecom demand came down both from the demand side as well as shift to lithium ion solutions. So telecom dragged down the business big time. And the other good thing was that the IUPS business, which is basically the VRLA business of IUPs which goes into, you know, industrial ups for critical power backup, that also grew by double digit. And this also gives us a hope because we have a very high quality product for this market market. We have invested in our factory and we have come out with new products addressing specific use cases like data centers like hospitals for critical power applications.
And we are very hopeful that those new products which we launched are yielding results. What dragged down, I mean a major contributor is as I mentioned, inverter batteries. And for inverter batteries we have fixed up a complete strategy of building new network architecture and also coming out with the RP home series of captains which you are seeing all over. So we want to gain back our entire market. Pan India, we are strong in some pockets, we are not so strong in some Pockets. So wherever we are weak, we are trying to come back. So this is broadly how it was.
European exports declined because of, as I mentioned, Europe was just between bad to worse in last fiscal year. Recession having kicked in, particularly our main markets, Germany, UK and Italy where we saw this downturn of our traction battery cells. Hopefully, hopefully right now with this new trade economics going on, you know, and with the new exchange rate being in our favor, we might see uptick in the next upcoming year. So all in all, as I said, about 70% of our business grew more than 10% and about 30% of our business grew by let’s say minus 9%.
So that brought down the overall growth to the number which, you know. So Kapil, does that give you a full picture?
Kapil Singh
Yes, sir, Very, very detailed answer. Thank you so much. The drag that we are seeing in the telecom business is that in the base or do you see further declines from where we are?
Avik Roy
What I hear from the customers is that I think it has bottomed out last year. Even if it does not have a growth potential in lead acid, it should have a growth potential on the lithium side. But lead acid portion, I think it has bottomed out because there are still some geographies where lithium does not have a business case. Lead acid has because there are areas which are, which they call green sites, for example, which means the power cuts are not so heavy that they need a diesel generator said as a backup. So if they can do away with the diesel set, then lithium has a business case.
But then there are some sites where the power cuts are so heavy till now that they have to have a diesel backup and therefore their lithium comes in. So it’s a mixed bag. I think most of the lithium solutions are going towards the green sides right now. So they have a good business case with without the diesel generator. So I would like to believe that the lead acid volume has bottomed out this fiscal year.
Kapil Singh
Great. One question I had
Avik Roy
planned for growth in telecom.
Kapil Singh
Okay, okay, sure. One question I had on the lithium ion business. What would be in your assessment the right level of duty that you would, you know, that should be there on this segment? The lithium ion cells, the import duty. I’m talking about
Avik Roy
Kapil. I will not like to be an advisory to the government. I think there are associations where we are also part of and we are working together and we’ll soon, you know, approach once the capacities are there. I think this is too early to be fair to the government. Also today, if suddenly they put a duty on sale, many of these Businesses will pack businesses and model businesses will suffer because where will they get the volumes from? So once people like us, we are up and running with certain scale. Suppose even if we come out with about 10 gigawatt hour of 12 gigawatt hour of production capacity then it makes sense to approach the government.
But now it is. Cell manufacturing is almost zero, nearly zero in megawatt level. So I think we still have a dependence, the industry has a dependence on import of cells. But with the new geopolitics and the new regime, what you see around there has to be a local capability where development on cell manufacturing in India, not only for Indian market but also possibly exports out of India to the western world. So that is the time when we should actually, you know, you know, bring this to the notice of the government. But we are actively discussing this in our associations where we are part of.
Kapil Singh
If you have done the assessment on scenario analysis for breakeven levels, what would be the range at range of utilization at which the business would be breakeven for the weekly? 9 cents.
Avik Roy
So let me give you a little bigger context. Let me talk. Start from the demand side. Right, so we still predict that about 120 gigawatt to 130 gigawatt hour will be the market size by 2030. And then we do a kind of a linear graph with 6 gigawatt hour capacity in phase one. We do not see this to be much of a challenge to use our capacity. The question is when? Because this will not be a linear growth. This will be possibly back ended growth most probably and there are certain applications and use cases which are coming up, which was not originally in people’s mind.
Advanced cell chemistry production started with particularly with electric vehicles in mind. And now you suddenly see that the stationary storage demand has boomed which is incremental in nature. But this demand will be mostly back end loaded because there are long gestation period of the projects. Quick information for you. I think a couple of months back Ministry of Power has announced, mandated the solar developers that if you have to reach 500 gigawatt hour by 2030 as government has planned now for all grid connected solar, you should have a minimum 10% storage backup for two hour capacity which means today we have 500 gigawatt is the aspiration.
Today we are at let’s say 180 gigawatt. So balance 400 gigawatt 10% of that for two hours which means 14 to 280 gigawatt hour of storage capacity alone is an incremental market. Just compare that with a 6 gigawatt hour capacity that we have put up. So in terms of demand I don’t see an issue if I do this math. The only thing is that will it be linear, will it be back ended, will it be upfront? That’s the question. So therefore we have multiple use cases and multiple chemistry that some will move faster than the other.
Two wheelers move faster we feel, three wheeler will move faster, we feel, Dess will move fast we feel and something this is how we see the market going now, our readiness. I think once we as I mentioned to Aditya’s question before once we reach 80% of the utilization which is around 4 gigawatt 5 gigawatt we should see how our manufacturing cost performs and we should see how the lithium price pan up. That time we should do the real math because our operationally we will be also more efficient as I mentioned from initial hassles of battery scraps and yield losses will also come out of that.
And also we will see what the lithium prices look like. So that is the time when we will be very confident that at water level level will be breaking even and if required will decide on further capacity put up at that stage. So right now I will not like to comment on a breakeven timeline or percentage utilization. Our target is to ramp up slowly over the couple of years to minimum 80% utilization and a running factory.
Kapil Singh
Thank you. How are you doing the pricing?
operator
I would request you to rejoin the queue. If you have any further questions management can answer as many participants as possible. Thank you. Participants please restrict yourselves to two questions so that the management can address as many participants as possible. If you have any further questions you may rejoin the queue. The next question comes from the line of Mohit Jain from Tara Capital Partners. Please go ahead.
Mohit Jain
Hello.
Avik Roy
Yes please. Yes Mohit, we can hear you.
Mohit Jain
My question is I’m assuming right now all the expenses relating to your medium iron plants are getting capitalized. So by when do they start let’s say flowing into the P and L segment and what kind of an impact could it have in the interim period which becomes fully utilized?
Avik Roy
See right now we. These are all capital work in progress. The project is ongoing.
Mohit Jain
Yeah, yeah. So by when do they start sort of getting completed and start throwing in the.
Avik Roy
So as I said we will take a call because we will be commissioning it stage by stage, not all together because not all will be ready on the same day and also on priorities like we said, line, one line, another line, another line will do stage by stage and then we’ll capitalize progressively.
Mohit Jain
And you mentioned that in the initial. Phases, obviously the losses here are higher rejection rates, etc. So can you help us understand this so that we are clear whenever it hits, given the pnl, what sort of an impact overall can we expect so that we are not caught on the wrong trip?
Avik Roy
So the global standard, I can tell you because we cannot talk about ourselves because we have not started producing, right? But if you look at international benchmarks of cell manufacturing, it’s normally between 10 to 12% rejections happen in first startup phase. That is what we have been.
Mohit Jain
No, no, my question, no, no, my question. In terms of, let’s say impact on our margin because of all of this, what is the kind of impact that you can expect once it starts flowing into the from the lithium ion side on the overall margin reported by the company?
Avik Roy
Mohit, as I mentioned in the previous questions, at this moment we will not like to make a comment on margins and roces of lithium ion business because this is largely unknown. All I can tell you that we will be the first one to run or start a gigafactory of cells in India. I have not heard anybody who has announced that in next 12 months time they will come up with production of cells. So industry has not grown. We will be the first one. We are saying that within this calendar year we’ll start trial production, this and that, but I have not heard anybody saying that in next 12 months they’ll start production of any manufacturing of sales.
So at this stage I will really refrain even if I do my health, my own calculations, but I would refrain from sharing that with you because the industry has not picked up right now all data you have is from Chinese manufacturers. So once you know, starts then you have a much better view. So as I said, our priorities are on the different line altogether. More on customer engagement, more on manufacturing efficiency, more on development of product technology, partnership with Svault, so on, so forth.
Mohit Jain
Got it. Okay, thank you. Thanks a lot for answering the question.
Avik Roy
Thank you.
operator
Thank you. The next question comes from the line of Sonal Gupta from HSBC Mutual funds. Please go ahead.
Sonal Gupta
Yeah, hi, good afternoon and thanks for taking my question. Just on the go to market strategy for the home inverters that batteries that you mentioned. So I just want to understand, right, like you have a very extensive network of auto battery, now you want to separate separately build a network for the home inverter. So does that mean that there is actually a loss in sales? Because I mean like it’ll take time to build such a network. Right. To replicate something like an auto. The depth of your auto network on the dealer side. So is there a risk here? I mean like in trying to bring build another separate channel?
Avik Roy
So I think I probably. I should have clarified a little more Sonal. I didn’t. Did not mean that we exit from that channel completely. I said there are complementary channels which we never explored in the past because we were. This business was under the automotive segment. And therefore some of the white spaces or some of the channels we left out. For example, the E commerce channel. We have never participated. You see, my competitors, they, you know, they have substantial presence in the E commerce market for both electronic inverter systems and inverter batteries. The white goods channel where they sell consumer durables.
We are not present in the past. We were still number one in India without even being present in these segments because we were fully going through the automotive network. So what I mentioned is that now that the business is segregated, we have options to add these white spaces to our existing network. So whatever growth plans we have taken for next year is incremental in nature. And you will see many of our if you do channel checks Excite being a number one inverter brand, they did not have any participation in E commerce in or in, you know, consumer durable outlets.
So these are the things which I mentioned that these are completely. And these channels require completely different set of, you know, market strategy, sales strategy. It is not same as you would sell in your conventional network of automotive channel. So those things have been all streamlined and we have lot of. That’s why how we came out with the new value proposition for RP home segment, as we call it Zindagi Nonstop as the tagline. And we are targeting the home user more than our automobile user. So it is not that we are exiting the existing channel.
It’s just complementing the other places where we were not there.
Sonal Gupta
Got it, Got it. Thanks for the explanation. And I mean we would be selling under this tubular batteries as well, right? It’s not just flat plate.
Avik Roy
No, no. This is tubular only.
Sonal Gupta
Okay.
Avik Roy
We do not have a strategy on flat plate inverters anymore.
Sonal Gupta
Because when it was part of the auto it was large. I think a big chunk was flat flip.
Avik Roy
But this was margin dilutive and we had issues with that. So that’s why we discontinued and shifted completely to tubular.
Sonal Gupta
Got it. And just on the lithium ion side, could you tell us what sort of. I mean like in gigawatt hours you have 1.5 pack capacity. I mean, where would you be in terms of your Quarterly level of supplies, I mean maybe in Q4. And what level of pack supplies are we doing?
Avik Roy
See the first of all the plant we have for pack manufacturing 1.5 GWh is not good enough to even evacuate our own cell capacity. Now the business is like this. The two wheeler and three three wheeler will be a pack business. The stationary, telecom and the vessels will be packed business. But the four wheeler passenger vehicle, four wheeler will be largely a cell business. So at least my 6 gigawatt minus the cell business, that capacity should be balanced with my pack manufacturing capacity which is not there today. So we are also increasing our package pack manufacturing capacity parallelly to align it with the cell capacity so that we can serve the pack customers adequately.
What we have been doing now is basically the thing which is not very sustainable that is importing cells and making packs for our customers. And that is quite risky because this has volatility of pricing, volatility of quality. There is a huge amount of warranty risk we will be sitting on because it will not be back to back from a Chinese supplier. So we are just holding us up before we commit big time to big time customers because there is too much of the risk versus the reward. Having said that, we are still making packs for some well known, I would say two wheeler and three wheeler manufacturers.
I think one of the top two OEMs we have started doing that. We are supplying packs for telecom applications. We have brought out solutions for the E rickshaw business, you know the three wheeler electric toto. This is a business where we want to serve through lithium solutions. And these are the additional portfolios we are bringing up on the PAC side so far in Q4 the uptick is good because a lot of we see a lot of interest in the customers. In the past you will know there was a huge shakeup of the two wheeler industry post the fame to subsidy withdrawal.
So we were sitting on large orders from not so well known smaller or mid sized E2 Wheeler manufacturers. They have all gone bankrupt, mostly either bankrupt or in many cases there is a risk of payment. So we are holding to that because they were largely dependent on fame to subsidy. While on Fame 2 subsidy. Let me also mention a little unrelated but very relevant. While the FAM2 subsidy has been withdrawn which was largely on the vehicle, a similar amount has been now declared as you know on this PME drive which is mainly focused on, you know, investing or subsidizing or incentivizing the public charging infrastructure as well as the fast charging networks.
So this includes, you know, you know, charging infrastructure for two wheeler, three wheeler, ambulances, trucks, so on, so forth. I think this is something which was very much required in advance because this creates the ecosystem for EV two wheeler, three wheeler, four wheeler to really, you know, ramp up volumes. This was I think also 11, 12,000 crores. But in this next two years government wants the public charging infrastructure to improve. Is that one happens. I think that’s a leading indicator of a very faster adoption of two wheeler and three wheeler in the country. We’ll be very happy to see that happening as quickly as possible.
Yeah, this is just a supplementary comment on because I got reminded when I mentioned same two subsidies. So. Yeah,
Sonal Gupta
okay, great. Sir? No, thanks. Thanks. That answers my question. Thank you so much.
operator
Thank you ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to the management for the closing comments.
Avik Roy
So thank you ladies and gentlemen. Thank you. It was a very engaging session with all your questions. I hope we have been able to give you some clarity on the business and the way forward. We are personally extremely excited to enter into FY26 with new management, new network, new portfolio. We’ll be able to ride through and we try to deliver on the promises. We still hold to our promises which we made to you in the recent past on our numbers. And thank you all for participating. If you have any further questions or would you like to know more about the company, we would be happy to be of assistance.
Please reach out to us. Thank you. And over to Aditya.
operator
Thank you sir. Ladies and gentlemen, on behalf of investech Capital Services India Private Limited that concludes this conference. You may now disconnect your lines.