Exide Industries , a leading battery manufacturer, reported a 2.1% decline in revenue for the second quarter, primarily due to the impact of GST rate cuts on batteries. The company faced challenges as distributors engaged in destocking following the reduction of GST rates from 28% to 18% on batteries.

Key Highlights

• Revenue declined by 2.1% in Q2
• GST rate cut on batteries from 28% to 18% led to distributor destocking
• Production cuts implemented to manage inventory
• Margin pressure experienced due to input cost inflation
• Lithium-ion cell manufacturing project nears completion

Impact of GST Rate Cut

The reduction in GST rates, while potentially beneficial for consumers in the long run, caused short-term disruptions in Exide's supply chain. Distributors and retailers postponed their purchases in anticipation of receiving new stocks with updated prices, leading to a sudden shift in market momentum.

Production and Inventory Management

In response to the market changes, Exide implemented production cuts in August and September. The company focused on cash management and kept costs under control at the manufacturing side. Raw material procurement was also kept in check. These measures, while impacting profitability, helped reduce inventory levels significantly.

Financial Performance

While specific financial figures were not disclosed, the company indicated that operating profitability was affected due to continuous pressure on input material costs. Exide has not fully passed on the input material price impact to the market, partly due to the timing of the GST rate cut announcement.

Lithium-Ion Project Progress

Exide's lithium-ion cell manufacturing project is approaching completion, with INR 3,947.00 crores invested to date. The company expects to start production by the end of the fiscal year. Key developments include:

• Equipment installation and commissioning works nearing completion
• Engagement with 2-wheeler and stationary energy OEMs for supply agreements
• Process validation and sample preparation for customers underway

Market Outlook

Despite the challenges in Q2, Exide Industries remains optimistic about the future. The company expects an uptick in auto OEM demand in the coming quarters, particularly due to the GST reduction impact. The aftermarket demand for batteries has shown resilience, with double-digit growth in both 4-wheeler and 2-wheeler segments.

Management Commentary

Avik Roy, Managing Director and CEO of Exide Industries, commented on the results: "We started the year on a strong note with Q1 registering about 5% growth, but showed a 2.1% degrowth in Q2, overall resulting in a modest 1.3% growth during H1. The sudden shift in momentum once the GST rate cuts were announced impacted our performance, but we believe this is a short-term effect."

Exide Industries continues to focus on operational improvements, cost excellence, and manufacturing technology upgrades to enhance competitiveness and improve margins in the coming quarters.

Life Insurance Corporation of India (LIC) has increased its shareholding in Exide Industries , a leading battery manufacturer, through an open market purchase. The move has pushed LIC's stake above the 5% threshold, triggering mandatory disclosure requirements under Securities and Exchange Board of India (SEBI) regulations.

Key Details of the Transaction

Implications of the Stake Increase

The acquisition of additional shares by LIC is significant for several reasons:

1. Regulatory Threshold: By crossing the 5% ownership mark, LIC has triggered the regulatory requirement for disclosure under SEBI norms. This ensures transparency in significant shareholding changes for listed companies.

2. Investor Confidence: LIC's decision to increase its stake may be viewed as a vote of confidence in Exide Industries' future prospects, given LIC's status as a major institutional investor in India.

3. Market Impact: Such moves by large institutional investors are often closely watched by market participants, as they can influence stock prices and market sentiment.

About Exide Industries

Exide Industries is a well-known player in the battery manufacturing sector in India. The company produces a wide range of storage batteries for various applications, including automotive, industrial, and submarine batteries.

This stake increase by LIC comes at a time when the battery industry is experiencing significant attention due to the growing focus on electric vehicles and renewable energy storage solutions. However, it's important to note that LIC's exact motivations for increasing its stake have not been disclosed in the available information.

Investors and market analysts will likely be watching closely to see if this move by LIC signals any broader trends or expectations for the battery manufacturing sector in India.