The Hindu Business Line : Exide plans 7.5% hike in prices by mid-October

Recycling Strategy
The company is planning complete buy-out of a smelter located in Maharashtra.
The smelter will be instrumental in recycling of used lead-acid batteries.

Pratim Ranjan Bose

Kolkata, Oct 4 Exide Industries is planning a 7.5 per cent average hike in battery prices by mid-October to part-offset the impact of spiralling lead prices, according to sources. The company has already increased battery prices by more than 10 per cent during this year. The new prices will primarily be effected in the replacement market across the range of batteries.

“We are planning fresh increase in battery prices to counter the record rise in lead prices,” a company source told Business Line.

Lead price is on an upswing – creating new highs – and nearly doubled since the beginning of this year. It touched a new peak of $3,655 a tonne on LME on Thursday before dropping to $3,570, due to supply restrictions. Lead constitutes nearly 70 per cent of the raw material cost of the battery major.

Acquiring smelter

As a long-term strategy to minimise the impact of such fluctuations in lead prices, Exide is planning complete buy-out of a smelter located in Maharashtra. The acquisition is expected to be through as early as next week. The smelter will be instrumental in recycling of used lead-acid batteries.

Investment

The board of directors of the company today approved an initial investment not exceeding Rs 25 crore in acquiring the smelter. Further investments are expected to follow in expanding the lead-recycling capacity of the smelter.

Recycling used ones

“We are planning to meet a substantial portion of our future lead requirement through recycling of used batteries,” the source said. The company was now busy in preparing the strategy to enhance sourcing of used batteries as well as recycling targets. “We may have to go for smelter capacity augmentation,” he added.

A welcome step

It may be mentioned that though it is mandatory for battery manufactures to retrieve used batteries and recycle the same (as a measure to curb lead pollution), in practice, most of the used batteries find their way to unorganised smelters and battery makers due to price advantage.

Apart from helping Exide to reduce the cost of inputs by way of greater use of recycled lead, the acquisition, therefore, would also help the company to confirm the environmental standards better.

Needles to say lower use of fresh lead would also lower the company’s exposure to price fluctuation in the lead market.

More Stories on : Mergers & Acquisitions | Electrical Goods | Metals

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page