India's largest gold refiner emerges as key player in high-tech PLI schemes

It was ranked at the top in a technical evaluation of bids by the government last month, ahead of formidable rivals such as Reliance Industries and Ola Mobility.

The evaluation was for selecting companies for attractive incentives to manufacture advanced chemistry cell batteries in India under the production-linked incentive (PLI) sch­eme. These batteries represent a crucial missing link in the cou­ntry’s tryst with electric vehicles (EVs). Cells account for 80 per cent of the cost of a lithium-ion battery and they are completely imported. The evaluation was based on a formula in which 70 per cent weight was given to co­mpanies based on their value-addition targets and 30 per cent to capacity-building targets.

The company topping the evaluations rankings is unlikely to ring a bell: Rajesh Exports. The Bengaluru-based company is a well-known name in gold refining across the world. But in the world of high technology, it is a nonentity. Yet it is among the four companies that have been announced as eligible for an EV battery manufacturing PLI.

Rajesh Exports’ PLI licence was won against tough competition. There were 10 players in the ring, many with experience in the traditional battery business, such as Exide or Amara Raja. Big names in automotive engineering such as Larsen & Toubro and Hyundai Global Motors were also in the fray. But the magic happened because Rajesh Exports offered to commit the highest value addition (in simple terms, the highest level of localisation) — more than double of the other competitive bidders. On the other criterion of capacity, which carried a relatively low weight, it had bid for a capacity to build 5GWH of batteries, far behind Ola, Reliance and Hyundai, the other three companies selected for the PLI scheme, which committed to build 20 GWH each.  

Competitors are already raising questions on how a company with no expertise in any high-tech industry and no visible technology tie-ups plans to make such high localisation commitment when the big boys, including global majors with access to the best technology, have not. Said a senior executive of one of the bidders, “The localisation commitments made by them beats me, especially when far more established players say that even in 2030 it would not be more than 50-60 per cent.”

 

It’s a valid question. But like Ola Electric, the company is among the entrants that were eligible for incentives under the PLI for non-automobile players entering the EV space. And just like Ola, Rajesh Ex­ports’ battery plant will be used for its captive requirement for a range of electric vehicles.

But the company has even more ambitious plans in the frontier high-tech space. It has applied for incentives under the government’s semiconductor programme through group company Elest Pvt Ltd to build a sixth generation display fab plant to manufacture state-of-the-art AMOLED display panels that are used in advanced smar­tphones. Again, these panels are entirely imported currently.

Clearly, Rajesh Exports has chosen sectors where the government is offering large incentives. For instance, for displays it is offering to finance 50 per cent of the project cost up to a maximum of Rs 12,000 crore in line with global trends, to ens­ure the viability of the projects. Two applicants in this space (which includes Sterlite-Fox­conn) have committed an inve­stment of $6.7 billion but have asked for government support for 40 per cent of the cost. Similarly, in advanced batteries the government has earmarked incentives of Rs 18,100 crore for 50 GWH of capacity, which is a lot of money.

So what makes this gold refining and jewellery giant enter a new and unrelated field of high-tech engineering?  Rajesh Mehta, the reticent chairman of Rajesh Exports, explained: “We are looking at getting into areas in the advanced technology space, which we see as the future. We have already done a lot of work in this space and we are confident we will do well.”  

Founded by Mehta in 1989, the listed company straddles the gold value chain — from refining to retail jewellery stores. It claims that it processes 35 per cent of the world’s gold production, especially after it acquired Valcambi, which has the world’s largest refining capacity, in Switzerland. It is also the largest manufacturer of gold jewellery and the world’s biggest exporter. It runs a chain of jewellery stores under the brand name Shubh Jewellers across Karnataka.

In 2020, Rajesh Exports was ranked seventh in the Fortune India 500 list with revenues of Rs 1.96 trillion and in 2021, it hit 348th rank in the Fortune Glo­bal 500, jumping 114 positions.

However, Mehta, who was ranked 61 in 2017 in the Forbes 100 richest Indians with a net worth of $2.6 billion, had seen a substantial fall in his ranking to 93 in 2019 and does not find a pl­ace in the list in 2020 and 2021.

So, can Rajesh Exports pull off this big gamble? Mehta said he cannot share too much of the group’s business plans. But, according to announcements in the public domain, last year, the company had signed memorandums of understanding with both Tamil Nadu and Karnataka to set up the combined EV and battery plant. At that time, Shyam Ragupathy, who oversees Rajesh Exports’ electric mobility business, had given some indication that it is looking at making 10,000 electric buses and trucks annually and would require around 175 acres of land. Mehta added that they are now looking at all EV segments — about 13 in all — but he wouldn’t divulge more.

Its plan to set up an AMOLED display plant has, however, come under scrutiny. “The key question is the technology is held by a few players — Samsung, apart from LG, Japan Display and Taiwanese company AU Optronics. All of them have spent billions of dollars and are unlikely to licence production to third-party players” a senior executive of a sma­rtphone manufacturer pointed out. He added that the only other player to apply for displays — Sterlite-Foxconn — has decided to go for LCD displays to begin with because it has a far larger market in the country.

These are questions that will be answered only when the plants are on stream. The yellow metal king of India is not saying much, but he is determined to prove the doubters wrong.