Ladies and gentlemen, good day and welcome to Exide Industries. Limited Q2 FY27 earning conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask a question. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touchtone telephone. Please note that this call is being recorded for quality control purposes. This conference is being recorded. I now hand the conference over to Mr. Raghu Nandan from Nuvama Wealth Management. Thank you, and over to you, Mr. Raghu. Thank you, Sid. Good afternoon and happy Diwali to everyone. From Exide Industries, we have with us MD and CEO Mr. Avik Roy, Director Finance and CFO Mr. Manoj Kumar Agarwal, President Legal and Corporate Affairs, and Company Secretary Mr. Jitendra Kumar. And Head of Investor Relations, Mr. Prashant Saratswat. Before we proceed, here is a disclaimer for the call. A few statements by the company's management in the call may be forward-looking in nature, and we request you to refer to the disclaimer in the earnings presentation for further details. We will start the call with brief opening remarks from the management, followed by Q&A sessions. I would like to congratulate the entire management team for robust results, and especially Mr. Avik Roy and Mr. Praveen Saraf for commissioning of 6 gigawatt lithium cell gigafactory at Bengaluru. I now invite Mr. Avik Roy for opening remarks. Over to you, sir. Thank you, Raghu. Good afternoon, ladies and gentlemen, and a warm welcome to you. Uh, all to the Exide Q2 earnings call. Just to add, our MD and CEO Pravin Saraf for the lithium-ion project is also on call. In addition to the participants mentioned before. Today I will cover how the market shaped up in Q2. Our business performance in Q2. And the commissioning of our lithium-ion cell plant at Bangalore. Before closing with the near and midterm market outlook. Overall, the demand held up well across our addressable markets during Q2. The affordability gains from GST rationalization, uh, supported the automotive demand, aided by healthy replacement market. Festive season buying has started, creating further demand since the end of the quarter. Vehicle registrations data of Wahan bears this out. Registrations rose by 1.3 million year-on-year for 2-wheelers, which is an increase of 32%, and 0.3 million year-on-year for passenger vehicles, which is an increase of 27% year-on-year. in Q2. Partly on a soft base— last year's Q2 was pretty low as buyers held back last year's September purchases ahead of GST 2.0. or implementation. Electric 2-wheelers reached 11.6% of the 2-wheeler retail in September, which is directly relevant for our lithium-ion business. We expect that 2 to 3 years from now, this automotive OEM demand will translate into aftermarket demand, for which we are getting prepared. Some of the new capacity expansions announcements by major OEMs are also encouraging us in this direction. Solar and infra push by the government is likely to drive our solar and stationary storage business in a big way. Now turning to company's performance. Standalone revenue for Q2 was ₹5,026 crores, which is up 20.3% year-on-year. The growth momentum of Q1 carried into Q2, taking our half-yearly revenue to ₹10,331 crore, up by 18.9% year-on-year. This is the first time we have crossed ₹10,000 crore revenue milestone in half year. Input costs remained elevated versus last year due to prolonged geopolitical challenges. especially across West Asia. as well as a weaker rupee. Crude oil prices went up significantly, resulting in an overall inflationary environment. On a sequential quarter basis, the full benefits of softer lead or softer LME for lead and antimony prices could not be fully realized due to continuous weakening of rupee against the US dollar. The company undertook various cost optimization initiatives to absorb this cost pressure. Further calibrated price increases and volume-led growth enabled the EBITDA margin expansion on a year-on-year basis. EBITDA came in at ₹606 crore, up 53.6% year on year, and EBITDA margin improved to 12.1% from 9.4% in the Q2 in, uh, an expansion of about 270 basis points on a low base. Last year's base of Q2 was pretty low for us. That also helped us. As you know, last year's Q2 was extraordinarily impacted by the sudden pre-GST-led demand slowdown where we had to ramp down production to improve capital efficiency. And that had led to certain under-absorption in our operations. For half year, EBITDA margin was 12.2%, up 130 basis points year on year. Half-year pre-tax profits grew by 46.5% year on year. The balance sheet remains strong. We continue to be debt-free and generate healthy operating cash flows. Let me take you through a bit deeper in the business, uh, insights. For the quarter 2 of '27, the automotive OEM business grew by over 25% for the 4th consecutive quarter. As vehicle makers stepped up production and dispatches. We gained high share across key upcoming OEM launches, the new launches of, for example, MG Hector, Tomahawk, and Tata Eris. The 2-wheeler and 4-wheeler replacement business delivered its 4th consecutive quarter of double-digit growth. Helped by a steadily expanding vehicle park and the reach of our distribution network. Home inverters grew by 20% year on year, while solar grew by 40% plus, supported by the favorable seasonal demand. As well as the government initiatives including the PM Surya Ghar Yojana. Exports grew by over 20% year on year for the 2nd consecutive quarter on a low base. We have informed you in the past that last year the exports business went through a deep decline because of global issues. And that's why on a low base we have delivered 20% growth for the 2nd consecutive quarter. This reflects our sustained efforts on geographic expansion and new product introductions. In September, we signed a long-term strategic cooperation agreement with XCOM Energy Solutions GmbH, Germany. This is to expand our industrial battery and energy storage business across the European Economic Area. Industrial infrastructure excluding telecom grew by a high single digit, supported by the industrial UPS as well as the traction motif for our business. However, government tenders, mainly railways and power sector segment, continued to remain muted during the quarter. I would also like to touch upon the progress made through our One Exide operating model, which we have been communicating to the market for the last couple of years. This is an effort to bring the full strength of the organization together. We are increasingly sharing assets across businesses, combining our lead acid market reach with emerging lithium-ion capabilities. And building a common digital engine across key functions. These actions have already unlocked substantial amount of additional 4-wheeler battery capacity through which we are able to meet both the OEM as well as the aftermarket demand concurrently. This has accelerated the scale-up of our go-to-market of our lithium-ion last-mile solutions. and improve productivity across the organization. Together, these initiatives are helping us to operate as one integrated company with a sharper customer focus. greater market outreach, and of course, last but not the least, much more efficient use of capital. Let me share an update on Exide Energy Solutions, our wholly owned subsidiary for lithium-ion cells. 23rd September was a milestone for us. Exide Energy completed commissioning of 6 gigawatt-hour of lithium-ion cell plant in Bangalore. In coming quarters, our focus is on stabilizing the lines and lifting the yields and ramping up the revenue. Customer qualification is progressing. We expect approvals from a few OEMs and telecom players in the near terms— near term. With e-two-wheelers now close to 12% of the two-wheeler retail, this opportunity is growing. As of today, Exide's cumulative equity investment in EESL stands at ₹5,352 crore, including ₹550 crore invested in the current financial year. With this, I close my opening remarks. Over to you, Raghu. We can now proceed with the Q&A. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset 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 Raghunandan from Nuvama Wealth Management. Please go ahead. Congratulations again, sir. Thank you for the detailed opening remarks presentation and also thanking the support of investor relations team. My first question is on the lithium business, uh, to Mr. Avik Roy and Mr. Pravin Saraf. On the lithium cell line, can you indicate how has been the response from customers on the cell sample acceptance? What is the progress for order wins in both NMC and LFP lines? Can you highlight opportunities in auto, bus, telecom, and other segments over the next 2-3 years? So I'll take the first part of the question, Raghu, and then I'll request Pravin to take over on the outlook. So, uh, as we mentioned in the previous quarters that we have been giving customer samples for their validation, so as we speak, uh, for the— for some of the leading 2-wheeler OEMs, the performance testing is over. Now they are doing the lifecycle testing. There is a process, there is a sequence. So lifecycle testing takes time, and once lifecycle testing is over, they'll do the pack and vehicle level testing. So that's the next phase. So far, the performance testing has been very satisfactory. We got positive feedback. This is on the NMC side. On the LFP side, the 102 ampere-hour LFP cells, we are already making, uh, we have given it to some telecom operators for validation as well as we are already— we have started using it in our, uh, e-rickshaw packs. Which is our own pack. These packs have been delivered to the market, they are running, and we have got quite positive response on the performance of the LFP cell as well. We expect the various validations of both NMC 2-wheeler OEMs as well as the telecom towers to close concurrently very soon. Meanwhile, we have also started supplying 2-wheeler samples to some more OEMs beyond the leading OEMs. So this is the status as of now. As of now, if you look at the outlook, market outlook, I mean, I will take about— talk about the current outlook and then I'll hand over to Praveen for the future outlook. Currently the 2-wheeler market, you know, you have seen last 3 months, you know, vahan registrations of electric 2-wheeler, they have ramped up to about 2 lakh vehicles per month, which was roughly 1.2 lakh last year. So in the Q2, we saw about close to 2 lakh per month, so which translates to about, you know, 7.5 to 8 gigawatt-hour of market which is existing today. from new vehicles. And with that, we feel we have adequately, you know, put up our capacity and we can take a share of the market. Even not looking at the future of future penetration, even at the current penetration level. I'll hand over to Praveen to add his views on this, on the outlook on BES and telecom. Uh, thank you, Avik. Uh, so yeah, so all the— what the sales we have are addressing 2-wheeler, uh, 3-wheeler, uh, also the 4-wheeler, some applications as well as telecom and BSS. So with, with the outlook for telecom already, uh, we have contacted, given the samples to the few customers, and we expect it to release soon. Uh, our cell is, uh, we have the possibility to make the cell, but as you all know that we have the PLI scheme announced. So we are waiting for the PLI. We'll of course apply for the PLI, and as under the PLI scheme, we will need to wait, and once the clarity is there then we can go ahead with the manufacturing of the cell. So we'll wait for that only, but, but otherwise our internal validations are showing positive results for BSS cell also. Thank you, Praveen. Thank you, sir. Uh, my second question was on capital allocation. The core business generates strong cash and funds the new energy investments while staying debt-free. Over the next 5 years, how is the board thinking about balancing reinvestment in the core business, building a new energy business, and returns to shareholders. What are the return thresholds which guide your choice? So at this moment, uh, I think I have mentioned this before also, our capital allocation strategy revolves around 3 elements beyond the dividend payout. Uh, the first is protecting the core. Protecting the core has 2 elements. Every year we invest close to our, our depreciation, which is about ₹400-500 crore every year on our core business. That has been our consistently— we have been doing in the past. But in the past, we were mostly investing on our manufacturing technology to improve productivity, to reduce cost. The— we'll continue to do that. Today we have 3— we have added one more element, which is also debottlenecking our existing lead acid capacity to cater to the market after 2 to 3 years. See, today is a unique sweet spot for lead acid because both OEM as well as aftermarket is growing concurrently. In the past, it never used to happen like this. If the OEM was growing, aftermarket would be slow. Aftermarket growing, OEM slow. Now we see both the segments growing strongly concurrently. So therefore, we are investing capital in debottlenecking each of our factories. Thankfully, we have multiple factories where brownfield expansion and brownfield debottlenecking is possible. So we are doing that. Substantial capital has been allocated to, you know, squeeze out every line, every asset. And we are also in the discussion of putting up additional capacity because a lot of automotive OEM has approached us because they have announced their capacity expansions as well in, in conventional IC engines. And we will have to respond to their requests as well. The other part of capital allocation is basically factory automation. This we are doing continuously over the last couple of years. to digitize, automate our operations, and improve our productivity. As well as— this is not only productivity, but we have seen positive benefit in our quality, in our warranty management, we have seen this automation contributing majorly. And the third most important capital allocation strategy is of course the advanced chemistry cell, which you have seen. Now most of our I would say the CapEx requirement for Phase 1 for 6 gigawatts is over, but you have to understand we have to still run this factory for next 2 to 3 years. We have to fund the working capital. So that we have to ramp up revenue. So the requirement of working capital will increase now, and we are building up an organization. So that third pillar of capital allocation in form of equity will continue for the next couple of years. So that's broadly our capital allocation strategy at this moment. Thank you, sir, for the comprehensive answer. Uh, just a last question before I fall back to the queue. Uh, Hyundai has been highlighting that they are fully focused on localization in India for electric vehicles. On the Hyundai-Kia tie-up, when can we expect progress on the co-investment announcement? Relating to the separate dedicated line. See, on this topic, Raghu, uh, you have to understand that at some point this is a material disclosure. At some point both of us have to make a joint statement. So it's not fair for me to give you details unilaterally because you need to have a view of Hyundai as well. All I can tell you, the discussions are in very, uh, you know, accelerated, I would say. And Hyundai leadership, Hyundai India leadership is extremely bullish and trying to work with us. It slowed down in the recent past, but it again accelerated with Pravin taking a lead and as well as the Hyundai India management, uh, collaborating together. Beyond this, I think we have decided that regarding Hyundai-Kia, we'll make a joint statement when we reach the milestone. Instead of one person, one party making a statement in the public domain. Praveen, would you like to add anything on this? Uh, no, thank you. This is exactly that, very serious and We can only say that we are meeting the— working closely with them to meet their roadmap for their implementation concerning the localization aspect. Yep. Good to hear that, sir. We look forward to the announcements. Uh, I'll fall back to the queue. Sid, can you take other questions? Thank you. Thank you. The next question comes from the line of Vibhav Zutshi from JPMorgan. Please go ahead. Uh, yes. Hi, sir. Thanks for the opportunity and congratulations for both the good results and the Gigafactory commissioning. The first question is on the lithium-ion business. If you can better help us understand this comment on, you know, lifecycle testing and vehicle testing. So have you started recognizing the revenue for these lithium-ion cells? Or it is, you know, still subject to approvals from the customers? And if you can name some of the customers across automotive and stationary, that would be really helpful as well. Uh, some of the names will not be able to tell you because of various NDAs. Maybe Praveen can highlight. Uh, briefly speaking, yes, as we said in the past, we have started generating revenue. As I said, we started with LFP This was also our plan because LFP commercialization or revenue would have a shorter cycle time of validation. Therefore, we started doing that from October, not in Q2, but from October. And now NMC, because it has a longer validation time, it will come next. And Praveen, you add on it that their questions on, uh, what kind of engagements we have with customers. Sure. So, um, all I can, I can just add saying that all the OEMs, major OEMs let's say, uh, they already have a huge interest in localization. Uh, there are very good interactions, very structured interactions at various levels like R&D, operations, and procurement in all functions. Uh, so there are, as you know, all know that there's validation steps. So it is really going in very good progress. Few of the customers, even major customers, expected to give the release soon for few of the applications, uh, and few applications like NMC may take more time. And few small-time customers have also given firm orders even for NMC. So, uh, I can only summarize and saying that we are going in right direction. And there is all positive feedback from all the customers. And so there are frequent audits at the plant. Like example, one process I can tell you is customer comes, identifies the sample in the process and after completion, the same sample has to be given to customer. That process also we have successfully done, and the results are also encouraging. Got it. Thank you, that's helpful. So just a follow-up here, um, so is it fair to say that NMC revenue for the 2 dealers might start to come in in the March quarter, uh, in, in all likelihood? Yeah, for small customers, uh, we can even start from next month in a small quantity. And for the LFP, we already started, like I mentioned. I think, uh, the, the major, major OEMs will, uh, we are, we are, we are hoping will start in from beginning of quarter 4 or maybe February. But surely this fiscal year. Okay, that's, that's very helpful. Yeah. Second question is on the core business, uh, on the lead acid business. Now base is not so favorable in the second half, and you know, we've talked about it in prior calls as well. But I mean, can we do a similar margin trajectory of 12% and maybe a growth of high single digits? Is that, uh, possible in the second half? Yeah, surely. I think, uh, in percentage terms it might come down, but you have to also understand that in absolute values, uh, it has gone to a next level, both OEM and aftermarket. If you look at the OEM market, it has— the passenger vehicles have gone up from an average of Uh, you know, 1.3 million to 1.6 million in a quarter. It's almost 16 lakhs. So absolute value will remain at that stage. In percentage terms Yes, you were right. If you look at the vahan registrations, uh, last year quarter 2 passenger vehicle was -1% and this quarter 2 was +22%. This is not us, I am talking about the vehicle registrations, retail sales. 2-wheeler was -6% last year, declined. This year it is +27%. So obviously there is a demand boom which is happening now. In Q3, these percentages might change, but, uh, in October, as we have already completed October, actually we have not seen that signal. October was even stronger than September. In percentage terms, I still feel I should, I should take a cautious view that it might come down moderate to maybe low double digit. growth. But, uh, still at a very high level, still at a very high level. Aftermarket, aftermarket, I think it will on an H2 level basis, it will normalize to the same level as we achieved in H1. Because the seasonal demand is also coming up. I don't see that moderating too much on the aftermarket side. OEM will, in percentage terms, will moderate down in second half. Okay, okay, thank you so much. Yeah. Ah, the other question was on margin trajectory. I think I missed out. Uh, I think we have said this, that we are clearly at the current lead level, at the current exchange, uh, rupee and lead level. We have decided that we will try to remain within our corridor of 12 to 12.5. In some quarters it will be a lower end of corridor, some quarters it will be higher end of quarter, uh, higher end of the corridor. This is— this will remain for the next 2 quarters, so it will not be impacted because, as you know, we have in the past also we have mitigated this input cost through calibrated price increases. Whenever required. We are only doing it when we are under input cost pressure. We will continue to do that in the current quarter as well as the upcoming quarter as well. So we are fairly successful in passing through these input pressures. Great, thank you so much, sir, and happy Diwali to the entire team. Thank you, Vibhav. Thank you. A reminder to all the participants, please restrict yourself to 2 questions. The next question comes from the line of Kapil Singh from Nomura. Please go ahead. Yeah, hi, good afternoon, sir. Uh, my first question is on the core business itself, the lead acid business. Uh, we— it appears that we are gaining some market share both in the OEM and replacement segment. So is that a correct observation, and what are the reasons that we are able to do that, if I'm correct? See, I mean, uh, gaining market share, of course we get in segment level wherever we are weak. There are some places where we are already market leaders, some segments or some SKUs. Or some categories, and in some categories where we are weak, both in terms of category as well as in terms of geographies. For sure, we are gaining market share, uh, over there. But it is not our sole objective to buy market share. We have not done in the past quarters or past 1 year. We will not buy market share. Uh, and, and conventional wisdom says that when a market is growing, booming, uh, you do not buy market share. You buy market share when the market is stagnant or declining. Since the automotive OEM market is growing and we already had a very high market share, I mean, we are close to 60% in automotive OEM, so we are growing along with the Uh, along with the growth of the market. This helps us in 2 ways. One is it gives us a favorable mix because my trade business to OEM business ratio remains robust. And secondly, it also, uh, you know, helps me in allocating my capacity to the markets where the margins are higher. For example, I will not sacrifice my aftermarket volumes just to feed OEM, and then because, you know, the margin, the profit pools are different in 2 markets. So we keep this in mind. And we take a very calibrated view when we allocate capacities and when we take pricing decisions. So one thing is clear, Kapil, will not buy market share just for the sake of it. Understood, sir. And the second question is on the cell business. Now what we also note is there is constant evolution of technology happening on various parameters like energy density or, you know, the fast charging or cell lifespan. So what is the roadmap for us to stay updated with the technology? Both on the current technology as well as, you know, new chemistries as well. And you had last time also mentioned that there might be some export of raw material restrictions that might come from November in China, and there might be a requirement for export licenses. So have we applied for those licenses? What is the status over there? No, no, I think you're— it's not export, it's import. So it's not licenses for us, it's for the vendors, for our suppliers, because we are importing raw material. Yeah, yeah, that's what I mentioned. That, uh, so as of now, take export license. Huh, so as that's what I'm saying, as of now on raw material side, uh, no, no announcements or suspension notices, nothing has come up. So we are getting raw material importing from our global sources. In case of those kind of controls, if it comes in the future, the lead time will increase, possibly the lead time of delivery. And in those cases, we will have to keep higher inventory to meet our production demand, which we are already discussing. Uh, this is one. So I'll, I'll ask Praveen to add some more and then I will come back to the future technology. Praveen, something on this raw material side? Sure. So on raw material, uh, like Avik already mentioned, so we are keeping a track, plus, uh, that the restriction may come on energy densities. So today we are very clear, and if necessary, uh, this— like, the lead time may go on. That's the only point. To safeguard ourselves, we have also done a long-term purchase agreements. Uh, with the suppliers. And so this is one which is giving security to us. And second, of course, keeping the inventory for the lead time. And regarding future technologies, future energy densities and chemistry, uh, Kapil, let us learn and master the current technology first. We are the first in this business. And India has to learn. It's not Exide has to learn. India has to first master this advanced chemistry which is in hand. So the licensed products, we must manufacture it consistently. Uh, you know, shift after shift, month after month, quarter after quarter. Let us master this because still, uh, the whole India, uh, I have not seen any kind of excitement around, uh, you know, knowledge development on the current SEC technology which is available. So once we master this, we have— we are setting up a pilot line where we are making coin cells and making our own roadmap for future products, and that will go concurrently. But first, the 5 products which we have licensed, we'll have to ramp up revenue. And reach a point where we utilize our full capacity. On the raw material roadmap, it's still, uh, I would say 2 to 3 years. We have mentioned this before, that 50 to 60% of the bill of material should be our target to localize in India in 2 to 3 years' time. But then it depends on a couple of things. It's just not localization for the sake of localization. You have to understand the technical criticality of that component, number one. Secondly, how much cost impact it has on the complete BOM, whether it is a minuscule component, a minuscule contributor or is a large-scale contributor in the whole BOM cost. And you have to also see the shelf life of the component, that whether importing and stocking technically helps us or it is against us. That. So we have to prioritize the raw material basis, uh, multiple criteria, which we are doing. Praveen is carrying out pilots with a lot of Indian manufacturers now. Um, but, uh, maybe Praveen, one sentence on that, on your localization. So we have more than 20+ local suppliers already working with them closely. Giving them the inputs. So typically it starts with material testing, then have the first check on the specifications like coin cell and then prototype cell manufacturing. Then you go to performance check and then the cell validation. So, so in few cases, we are already at the stage of performance checking. In few stages, it's at the first stage. So important will be all these suppliers at a pilot stage, so they also need to further go on large-scale manufacturing. Yeah, and so this is— we are closely working. And like Avik mentioned, it's a 2 to 3 year roadmap, but we are closely working with them as we know, uh, that the Today the supply chain is from outside India, and localization will certainly help us. Here, only request what we are always looking at is for the cost competitiveness of local suppliers is some kind of support from government. And there is already, if you are knowing, discussion about the PLI scheme. So we are also looking forward that support for the local suppliers. Okay, thank you so much, sir, and best wishes. Thank you. Thank you. The next question comes from the line of Arvind Sharma from Citi. Please go ahead. Mr. Sharma, please go ahead. Yeah, hi, can you hear me? Uh, yes, you are audible. Thanks. Good afternoon. Thank you for taking my question. Uh, could you shed some more light on the order book, if any? First question, the lithium-ion cell business, you're not naming the OEMs, but since you said some of the smaller OEMs have placed orders, Uh, Arvind, uh, you, you have to go by the capacities that we have. We are not sharing order book at this moment, but we have commissioned, uh, 2 lines of NMC. The first line is 1.5 gigawatt. Uh, and the second line is also 1.5 gigawatt. So first we will utilize the first line. Once we reach our 1.5 gigawatt, then we will shift to the second line. So at this moment, you have to make your assessment of revenue through our capacity. Got it, sir. Uh, so second, uh, according to the OEM part, uh, since you have supplied some samples for an OEM, what is the price difference between getting a cell from Exide and importing it? So this is a part of the negotiation. There is no hard and fast— there are other strategic advantages of having a local supplier or having a second supplier. There are some price dynamics, uh, cost dynamics on the imported cell also happening in China, uh, due duty withdrawal, uh, some additional tariffs. So it's dynamic. So this is a part of negotiation, and you have to understand, no OEM or no large OEM will spend so much of time and resource on validating our cell. Unless they have a strategic interest in having a second source and a local source. So that is how we are working right now. But, uh, frankly speaking, uh, at a very high level, uh, at lithium-ion, I will not segregate NMC and LFP here. We still have a 5 to 10%, uh, cost gap with imported Chinese on landed basis. Based on the form factor and chemistry. So that's a very high-level statement. We still have that gap on a landed basis, but still there are other strategic benefits which sometimes offset this. Yeah. Sure, sir. Uh, so the second question would be on something that you highlighted, that you've got orders from the Hector Tomahawk as an auxiliary battery maker. As an auxiliary battery supplier in EV and PHEV. Are there any more models where, uh, you could— Yeah, yeah, yeah, the work is on, work is going on. And the typical way the OEM works is that it's not that all new launches will come to us. Some of them, they will also work together with our competitors also. But they select which platforms to go with whom. Fortunately, in these auxiliary batteries, we are the leaders, so we are the preferred choice for most of the OEMs. But even other than auxiliary batteries, for SLI batteries, starter batteries also, you know, they select for— there are so many new launches coming in. They work on different platforms with different OEMs. So here in this case, in the last 2 quarters, the names I mentioned, uh, we are 100% with them. Because that is how they develop the product along with us. So there are many such SKUs in the pipeline of many OEMs. I mean, even in the previous quarters we had this kind of 100% share. Tata Sierra, I think, when they relaunched, they worked with us. But this is, uh, their standard way of, uh, product development. If you could just share what would be the average— sorry for interrupting, Mr. Arvind. Please rejoin the queue for more questions. All right, thank you. Thank you. The next question comes from the line of Dinesh Gandhi from Oakland Capital. Please go ahead. Yeah, hi sir, uh, my question is for BSS Cell. So you indicated that, uh, we are doing internal testing. So is this on 314AH or, uh, different, uh, voltage? Yeah, yeah, yeah. I have never said that we are testing, uh, BSS cells right now. We have said that in the 4th line, the line 4 which we have, that is the line where we will make this BSS cell. So, uh, it is 300+ ampere-hour. I am not giving you the exact ampere-hour, which is not in public, public domain, but yes, you are in the ballpark. Uh, what we are developing is slightly higher than that. So this is what we are setting up. The plant is ready, and actually in this line we'll make multiple, uh, products. prismatic. But the demand from other applications are more. BSS, at this moment, whatever— unless we see the future of the PLI, uh, we will not declare our BSS roadmap. But we can use that line for other products also if it— if the PLI doesn't happen. Uh, having said that, You have to also understand that whatever localization content government has announced for BSS, I think they have said 60%. I'm not very sure whether that 60% is at the AC level or DC level. But they have excluded batteries. Now, BSS without batteries, uh, it's like, you know, people are busy drilling and welding, uh, freight containers now. So if that is localization, we are not in that game. We will stick to batteries and cells. Uh, we have a cell in the pipeline which we'll make on the line 4, but we'll, we'll see the market developing, we'll see the PLI shaping up. And, uh, then we'll go full throttle. But obviously our other priorities like 3-wheeler telecom, 2-wheeler, these will come before BSS. And this BSSL is one of those 5 products, uh, yes, yes, yes, yes, yes, yes. And when we talk about Sorry for interrupting, Mr. Gandhi. Please rejoin the queue for more questions. Thank you. The next question comes on the line of Krupashankar NJ from Avendus. Please go ahead. Good afternoon and thank you for the opportunity. My first question is on the lead asset business. Just wanted to get a sense of what would be the quantum of price hikes which were taken in the second quarter. And what is planned for the third quarter, sir? So, uh, I have— we have taken calibrated price increases and we were taking since January. It's important that last year, Q3, after the GST 2.0 was announced, we purposely did not take any price hikes in Q3 because we wanted to pass through the entire benefit to the end consumer. But since the input cost started shooting up from January, we started taking price increases step by step across the segments. I think between January and October, I would say, because in October also we have taken one round. In, in January and October, we have taken about, uh, more than 10%, I would say. Uh, and so that's the year-on-year effect, about 9 to 10%, particularly on the vehicular side. Um, 2-wheeler is lesser than that. 2-wheeler will be about 5%. So that is what, uh, I think it's about 10%, 9 to 10% on 4-wheeler and about 5% in 2-wheeler. But we have also taken price hikes in the OEMs. This is which is outside the LATE formula. We were forced to do that. We have taken price hikes in our Uh, tubular batteries or inverter batteries also. So across the segments, uh, I think across use cases, we have taken calibrated price hikes to offset the input cost rise. Yes, sir. Slightly, uh, forward-looking question. Um, what do you think will be the inflection point for Phase 2 CapEx? in lithium-ion. And given that the current iron ore depreciating, do you see that the cost per incremental gigawatt-hour to be higher than the first 6 gigawatt-hour we had set up? Uh, could be, could be, because we already see this happening at the tail end of our CapEx Phase 1 also, because dollar has depreciated— appreciated by 10%. So the first 1 year, 2 year, whatever our CapEx was, at the tail end of the CapEx we found that weak rupee hitting us. So in Phase 2, we do not know at what level, uh, the exchange rate will be, but yes, it can work negatively regarding our CapEx per kilowatt-hour. Unless, unless the equipment prices go down, basic prices go down. Got it. And the inflection point for Phase 2, sir? What is the inflection point? I think, as you know, this is, uh, we have bought the land for 12 gigawatts. We have put up the all the utilities, the power substations, the boilers, chillers, everything for 12 gigawatts. So, uh, and we have everything in the same campus, uh, our Giga Campus. So our lead time for Phase 2 will be much lower than Phase 1, because Phase 1, it started from greenfield. Uh, so since the lead time for Phase 2 will be lower, we should be waiting for about, let's say, 80% utilization level. And at that point, we should make a decision. This is my personal view. Thank you. Those are my questions. Thank you. Thank you. A reminder to all the participants, please restrict yourself to 2 questions. The next question comes from the line of Pradeep Pandey from Axis Capital. Please go ahead. Hello sir, thank you, uh, for taking my question. I had a question on investments. Uh, I noted that you have invested about ₹500 crore in the new Energy Solutions sub, uh, but your standalone investments are more or less flattish at about ₹10,000 crores. Just wanted to understand, uh, if you have taken any impairment on any of the investments and, uh, What would that relate to? I'll hand over this question to our CFO, Manoj Agarwal, please. So if I got your questions correctly, see, 2 parts. One is that pure-play asset, which is our capital asset, has not been reduced per se. Both in the core business and anyway investing in the new business. And if you're talking about investment side, uh, on that part, yes, there is a mark-to-market loss for HDFC Life. In these 6 months of around ₹600 crores. That may be the reason you're talking about the, the base of the investment which has changed from X to X minus. This is only mark-to-market. Okay, so thank you so much. That answers the question. Thank you. Thank you. The next question comes from the line of Amish Thakkar from 2380 Capital. Please go ahead. Mr. Thakkar, please go ahead. Mr. Thakkar, please go ahead. हेलो प्लीज एंड म्यूट इसे हेलो आह यस यू आर ऑडिबल नाउ Yeah, I just have a very simple question on the core business, lead-acid battery business. What's the 3 to 5 year guidance on both flat plate technology which goes into automotive and the single lead-acid batteries that go into industrial packages across inverter also. You're the choice. Yeah, so as you know, IC engines on the automotive side, the IC engines are here to stay, both from Aftermarket side because of the park, as well as for the new investments which the top 3 automotive OEMs have announced on the conventional vehicles as well. Uh, this will remain flat plate, but this will not be the— not remain as a standard flooded battery, starter battery, as we have mostly today. Because, uh, more and more we see trend on enhanced flooded battery, EFB battery as we call it, as well as the AGM batteries, which is absorbent glass mat. So we are— we have both— we have this portfolio, we are exporting it, we are selling this to our OEMs big time. And even in aftermarket, the EFB sales have picked up big time. So the technology in automotive will shift, I believe, from the standard flat plate flooded battery to EFB and AGM. Like, it's the same with Europe and USA everywhere. On the, on the inverter side, uh, tubular, you know, we are the largest tubular battery manufacturer, and tubular does not only go to inverter, it also goes to solar, it, uh, multiple applications. It's a seasonal business, but the technology will stay like this because India is the, is the largest tubular manufacturer in the world. Nobody else uses tubular, but in our kinds of use cases in Indian conditions where the you need both longer life as well as longer backup, I think tubular is more suitable for the market. So this will stay, we still feel. Yeah. I had a follow-up question on that as well. So we picked up some news from the on-the-ground on China that some of the telecom tower operators and industrial companies are moving back to tubular. Instead of lithium, given the higher insurance cost, insurance premiums are rising because of fire hazards that lithium presents. We have also heard this. But, uh, you know, in India, just— it's about 1 year the operators have shifted from AGM batteries to lithium-ion batteries. I think they are still going through the learning curve. Maybe when they see the life cycle and the abuses in India, it's virtually— what they did is that they replaced lithium-ion Uh, sorry, they'll replace the AGM batteries, VRLA batteries with lithium-ion and remove the DG backup DG set, and they're draining the battery. That's the application. Because the— now they don't put the diesel generator in the BTS towers. Uh, probably they'll go through their life experience, uh, and then they will take a call. But whatever rumors you are hearing, I have also heard from certain quarters. I don't know whether it is right or wrong. Uh, but the, the economics, the economics of lithium-ion in telecom tower only holds without the diesel generator. That is what I have been given to understand. If somebody has to put back the diesel generator, then the economics is not as attractive as it is now. So do you see a similar trend playing out in India where insurance premiums are rising? Sorry for interrupting, Mr. Thakkar. Please rejoin the queue if you have more questions. A reminder to all the participants, please restrict yourself to one question. The next question comes from the line of Viren Deshpande from Alpha Peak Investments. Please go ahead. Hello. Yes, please. Congratulations for the very good results posted in the Q1 as well as Q2. And I think I heard, and the new plant which has been commissioned So actually, I had a question that our Property, plant, and equipment in our balance sheet now is around ₹8,140 crores, including the capital WIP of ₹160 crores. But the depreciation provided in the consolidated results has come down. Yeah, what's your question? My question is actually after the commissioning of the plant in September end, The depreciation should go up, no? It should. Uh, the balance sheet items are generally responded by the CFO, so I'll hand over to Manoj Agarwal. Okay, okay. See, here 2 parts we have to see. One is that there was depreciation already in our Pranthish plant in the books, right? So entire depreciation incremental is not the full value of the CapEx what we have done. It is only for 7 days, number one. Number 2, for our core business, depreciation is gone down because of the assets has completed their life. That is the reason. Now you will going to see in the H2 fully where you see that depreciation will be higher than the first half of this year. Yes, because the 5,000— almost we have invested some 5,300 crores in our Phase 1. So major part has to go to the property machinery. You have to please remember we announced the commissioning on 23rd of September when we capitalized these assets. So actually the full impact you will see in H2. Sorry for interrupting, Mr. Deshpande. Uh, we are currently doing one question per participant. Please rejoin the queue for more questions. Okay, so that, that will appear in H2. Yes. And, uh, now secondly, this, uh Oh, actually, actually, this was just a bookkeeping question. I wanted to know about the second half. Sure, let the management decide. Yeah, yeah, the second half, uh, you are talking about the outlook of the second half? Yes, yes, outlook for the margins also. Yeah, yeah, this I think I have answered. Uh, you will see in the transcript, I think in the beginning someone asked. We said that we will be— we will stay within the margin corridor as we are today. Okay, good. Okay, thank you and all the best. Thank you. Thank you so much. A reminder to all the participants, please restrict yourself to one question. The next question comes from the line of Kevin Gandhi from Capgro Capital. Please go ahead. Yeah, hi sir, um, thanks for taking my question. Just wanted to know the time to optimize this figure, what are planned and what are the margins expected? I think you had said that, uh, 80% utilization will actually go for the second phase. So how much time do you think it will take to optimize the first plant, and what are the margins expectation, the broad base range would be? No, we— there is no margin guidance on the lithium-ion side as yet. We do not know what will be the dollar per kilowatt-hour price at that point, uh, so it's dynamic. All I can tell you, I can tell you in gigawatt-hour. In terms of our output in gigawatt-hour, which is limited to 6 gigawatt-hour, and we can maximize that output once we input— as much as we improve our yield. So this is our plan. Uh, I— we have a— I've said this in the past that our plan is in— we have to make it cash neutral in 2 to 3 years' time, which is, I think, uh very fair asks by global standards, uh, and we will see beyond that. Okay, so sir, like, uh, in 2 to 3 years, like, can we expect a full utilization of 80% by 2 to 3 years? Should be, should be. Yeah, you're right. It depends upon our operational excellence also. Where are the other players in this race? Have they started any commercialization? Any— this is, uh, I cannot comment on other players. I think you have better insights on competitors, so I will not comment on the plans of what others are doing. Thank you very much. We move to the next question. Okay, okay. And sir, uh, just another question, just a follow-up question on this. So actually, the first one actually, uh, quite commercialized the lithium battery process. There were many last phase who actually started it, so Thank you. The next question comes from the line of Animesh Jain from Dalal & Broacha. Please go ahead. Hello, thank you for the opportunity. So you have mentioned that holding cell material for longer than normal because of China restrictions. So how much inventory cover has been secured to support this ramp-up and how much additional working capital is required to ramp up this thing? No, the working capital, whatever is required, has already been factored in our annual capital allocation budget, which we already declared officially. Our board has approved for that amount already. So in terms of working capital requirement, we are well covered within our approved limit. Regarding the time, I think, Praveen, you can add for, uh, till what month you want to hold inventory. Yeah, so, uh, so we are looking for 3 months, uh, inventory holding, uh, because of the increase in maybe the— because the restriction is April it takes some time. But however, I must say that there are few items which are like electrolyte, you cannot hold for 3 months. So it has to be with shorter cycle ordering, and that we are taking care. So many of the raw materials are imported from China. So the worst testing supplier requires test OEM validation, and how would it affect our time? The gentleman, uh, we have said this many times that, uh, these materials are 100% from the approved vendors of our technical partner, SVOLT. We have not ventured out and tried to develop our own low-cost vendors. So all the prototypes, all the samples are being tested through the same raw material vendor-supplied material. Okay. again a validation from the OEM. Possibly, possibly it will take, it will take, obviously. But that is the, that is the, that is the activity you have to do. You have to localize your supply chains. You can't avoid that. Yeah, but that's maybe 2 to 3 years from now. First, we have to be satisfied with their performance. Okay, thank you. Excellent. I think we can take one or two more questions. Last question. Is that, uh, have I answered your question? No, no, I was asking, does test OEM validation be fixed to Indian suppliers? So it requires Thank you so much. The next question comes from the line of Janesh Gandhi from Oakland Capital. Please go ahead. Yeah. Uh, not linked to the underlying commodity? No, it is, it is. So far I think lithium is also well indexed. So I'll, I'll hand over to Praveen to answer this to the extent possible, whichever we can say in public domain. Praveen, go ahead. Yeah, yeah. So it is, it is exactly, uh, it depends on the indexing mechanism. On the lithium cell side, so you indicated that we have already started supplying to small OEMs and even for the larger OEMs. So on the pricing front, Uh, would pricing would be similar to lead acid where it's indexed to underlying commodity, uh, or RM basket? Would it be on similar lines or it would be And also always the reference as today, as in today is the landed price from China. Okay, okay. And lastly, can we talk about CapEx for FY27 and FY28? No, that we have not yet— will not be able to tell you now because we have not presented to our board. Uh, we of course, we roughly know, but as you know, going forward it will be mostly for the working capital and loss funding, things like that, not so much for capital equipment. But at a console level, what should be— as I said, I mean, for the lead acid core business, we'll still continue to invest about ₹400-500 crore every year. Which is same, same as our annual depreciation. So we have to do it, uh, for our core business, for protecting the core business. As far as the new advanced chemistry investment is concerned, Uh, I think we are, we are just in the process of presenting it to the board. Possibly in the next quarter we'll be able to tell you. Okay, great. Got it. Thanks, thanks a lot. Thank you, ladies and gentlemen. That was the last question for today. We have reached the end of question and answer session. I now hand the conference over to management for closing comments. So thank you, gentlemen. I mean, there are a lot of interesting questions, and I hope I have been able to answer, uh, all of them. Uh, in case you have further questions or if you would like to know more about the company please reach out to us, to our investor relations department, and we would be happy to be of assistance. Thank you very much for joining in. Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.