Exide Industries Ltd, the storage batteries major, will build up smelter capacity so that 70% of the lead it needs comes internally, helping it save on import costs.
Over the past two years, lead prices have been see-sawing wildly, forcing the Rajan Raheja controlled company to increase prices on four occasions last year.
TV Ramanathan, Exide’s managing director and chief executive officer, said the two smelters that Exide has acquired over the past year will help it achieve this goal.
“These smelters will give us a stability,” Ramanathan said. “And in three to four years time, 70% of our total consumption of lead and lead alloys should come from these two smelters. That is our plan.”
Speaking to reporters after the company’s 61 st annual general meeting here, Ramanathan said Exide has not increased prices this year, but will do so if lead cross $2500 a tonne.
“We will not hike the prices unless it goes above $2500 a tonne,” he said. Lead had shot up by 52% during 2008-09, from $ 1945 a tonne in March 2007 to $ 2945 a tonne in March 2008. At present, it is ruling at around $2200 a tonne.
Exide acquired a 100% stake in Tandon Metals Ltd, a lead smelter, and is now expanding its capacity and upgrading it. Last month, Exide acquired a 51% shareholding in yet another lead smelter, located near Bangalore, called Leadage Alloys India Ltd.
Not only will these smelters help Exide reduce dependence on imported lead, all the scrap batteries collected by Exide would be sent to these plants fore recycling.
Exide is partly cushioned by deals it had struck earlier with all the automobile majors that it supplies.
“Almost 70-80% of our customers are now linked to the LME average prices,” he said. “This year, from August 1, we are putting some of our export customers on the LME linkage.”
Ramanathan said Exide has a Rs 180 crore capital expenditure plan for this year, with Rs 90 crore earmarked for the automotive batteries business, and Rs 60 crore for the industrial batteries segment.