On the lithium-ion business, the Chief Financial Officer (CFO) said it is too early to comment on margins as the lithium pack business is currently unprofitable due to low value addition from imported cells. The management said pricing conditions for lithium-ion cells are expected to be impacted after China’s export value-added tax (VAT) rebate is fully removed from January 1, 2027.
The management added that increased utilisation of Chinese battery factories for domestic demand could reduce their appetite for exporting excess volumes at lower prices.
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The import duty on lithium-ion cells currently stands at 5%, with potential changes depending on the growth of domestic cell manufacturing capacity. Initial margins for lithium-ion cells remain difficult to estimate as the company is at the early stage of production, with yields still improving.
On pricing, the management said it implemented year-on-year price corrections of 4% to 6% across various categories in Q1 FY27 to partially offset elevated input costs and adverse currency movements. It added that pricing actions for Q2 will be monitored closely, with a dynamic, step-by-step approach expected instead of a single large adjustment.
On raw materials, the management said current samples are being sourced from China, while development of an Indian raw material supply chain is expected to take three to five years. The company said China’s export control announcement does not currently cover raw materials, but additional approvals will be required from November, which may require higher inventory levels.
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The management said electrolyte will initially be fully imported from the technology partner’s established supply chain, while pilot projects are underway with a large Indian manufacturer for potential localisation.
The company aims to localise 50% to 60% of its bill of materials over the next two to three years and is engaging with multiple companies for different components. It added that developing a domestic raw material ecosystem will require investment in areas such as lithium refineries, cathode active material and graphite, along with government support.
