Sector : Storage Battery

Industry
Company : Exide
Industries
Submitted by :
Akash Sarkar(13004)
Surya Narayana Adiga(13048)
Nirupam Mandal(13025)
Pathan Javed(13026)
Ajvad Rehmani(13003)
Shahab Khan(13040)
 Storage Battery
Industry(Contd..)
•
• The Indian storage battery is in the growth stage. The
industry has grown more than 125% from 2005-06 to
2009-10. Per capita battery market in India is almost
1/10th of global average. This is proved from the fact
that the battery use per capita in India is around 1.6 $ /
per annum as against a world average of 10.1 $ / per
annum and US consumption of 48.7 $ / per annum.
Therefore, sustained economic growth would drive the
battery demand in India.
•
• Although, domestic production of batteries is growing at a
healthy pace, it is not sufficient to meet the aggregate
demand. India relies heavily on imports. Imports
accounts for nearly 40-50 % of domestic supply. Imports
have grown by 20.6 % in 2009-10 and is likely to grow by
17.6% in
 2010-11. All market sizes and segments are for organized segment only
 Storage Battery Industry
•
• There are strict pollution control and regulatory norms,
especially with regard to recycling of toxic wastes such
as Lead. There are long approval processes. The
unorganised players in the replacement segment
therefore has to follow these norms to sustain their
business. This also acts as an entry barrier.
•
• Exide is the market leader in batteries with a strong brand
equity and widest distribution.
•
• Production of batteries grew by 18.3% in 2009-10. A
healthy growth in production was driven by higher
demand for batteries from automobile and industrial
segment. This will lead to 15% rise in production of
batteries in 2010-11.
All market sizes and segments are for organized segment only
 Storage Battery
Industry(Contd..)
•
• Storage battery industry of India for OEM segment is mostly
organized. For eg Exide and Amara Raja accounts for more than
95% market share for automobile OEM segment.
•
• The replacement market is fragmented. The unorganized players
make up about 55% of the market, while the organized players
account for the remaining 45% of the market. The market share for
the organized players was 30% in this segment 4 years before.
•
 Reasons for fragmentation :
•
• Low entry barrier in replacement market as law allows recycling of
lead. So small players collect used batteries and recycle them to
sell in the market.
•
• Cost structure in replacement market of unorganized players is 20-
25% less. The reason behind this is that unorganized players don’t
have R & D, branding and channel margin expenses.S
All market sizes and segments are for organized segment only
•
 Storage Battery
Industry(Contd..)
• Lead accounts for 75 % of all raw material costs. During 2008-09, lead
prices peaked at US$2,823 per tonne in April 2008 andUSD 2,368
per tonne in January 2010. Lead cost also accounts for 55-65% of
sales.
•
• The industry is expected to face pricing pressure from the user
industry during the year 2010. Consequently, companies are
unlikely to completely pass on the burden of rise in price of lead
(major raw material). This is expected to lead to a faster rise in raw
material cost as compared to income. Operating profit margin,
therefore, is expected to contract by 1.4 percentage points to 20.7
per cent during the year. However, net margin is likely to fall by
only 0.8 percentage points to 11.7 per cent. A slower rise in
interest expense is expected to restrict the fall in net margin during
the year.
•
• Automobiles and back up power supply equipments are some of the
large users of wet lead acid batteries. Depending on the type of
battery, it has to be replaced almost every 3-4 years. Hence the
replacement market for batteries is bigger than the OE market.
All market sizes
Apart from the organised, and segments
branded are for
battery organized segment the
manufacturers, only
 Current Market Size

C u rre n t m a rke t size o f th e b a tte ry in d u stry co n sid e rin g

u n o rg a n ize d co u ld b e a n yw h e re a ro u n d R s 1 7 0 0 0 -1 8 0 0 0
cro re .

All market sizes and segments are for organized segment only
 Future size and growth of
industry
• Net sales of storage batteries industry to rise by
22.5% in 2010-11.Market size is expected to
reach Rs.12,870 crores in 2010-11.
•
• The growth will be mostly driven by automobile
segment and a steady growth in the industrial
segment.
•


•
•
•
•
All market sizes and segments are for organized segment only
•
 O p p o rtu n itie s o f g ro w th

• The growth will be driven by :

•
 Automobile segment :
a) The passenger car market in India is expected to grow by 12%
annually over the next five years which in effect would
translate to more than 100% growth for the domestic battery
industry during this period.

b)
c) India’s low passenger vehicle and two-wheeler penetration per
1,000 people at 11 and 66 represent an opportunity.

d)
e) The Indian automobile industry expects to invest up to Rs. 80,000
crore in fresh capacity in four years and car manufacturing
capacity is set to rise to 57 lakh units by 2015, according to
Ernst & Young, as the industry sustains a 10-15% CAGR.

f)
All market sizes and segments are for organized segment only
 Opportunities of growth
• Industry segment :
•
a) Infrastructure development is a key focus area for the
Government and in the Union Budget 2010-11 an
amount of Rs 1,73,555 crores has been allocated for this
sector which is 46% of the total plan allocation. This
huge spending on infrastructure by the Government
coupled with plans for modernization of railways and
setting up of nuclear power plants etc. would augur well
for the battery industry.
b)
c) India’s per capita power consumption was low at 704 kwh in
2008-09 against a global average of 2,800 kwh. Revised
the incremental power capacity target from 78,577 MW
to 92,700 MW during the Eleventh Plan (2007-12) with
the objective of raising per capita consumption to 1,000
kwh by 2012.
All market sizes and segments are for organized segment only
•
 Opportunities of growth

d) The government’s priority is to expand pan-India railway

connectivity and modernise its facilities with an
estimated Rs. 2,000 billion investment in the Eleventh
Plan.

e) According to Gartner, India’s IT end-user spending is

expected to grow at a CAGR of 14.8% (2007-12),
generating USD 110 billion in business potential in
2012.
f)
g) IT and IT-es industry to reach USD 175 billion in revenue by
2020 and the domestic component could touch USD 50
billion by 2020.
h)
i) Mounting power deficits particularly in India will open up
All market sizes and segments are for organized segment only
the need for backup batteries in critical equipment and
 Opportunities of growth
Telecom Segment :


•
§ With the launch of 3G services in India there will lot of
investments needed the number of 3G-enabled handsets
will reach 395 million by end of 2013.
a)
b) Indian’s mobile subscriber base is set to exceed 771 million
connections by 2013, growing at a CAGR of 14.3% in the
same period from 452 million in 2009.
c)
d) India currently has around 350,000 telecom towers which
will provide enough replacement demand for batteries.
•
•
All market sizes and segments are for organized segment only
 Threats to storage battery
industry
§ Volatility in Lead prices-. Prices of Lead, which is a major
constituent of batteries, are extremely volatile. This
volatility not only creates uncertainty on procurement of
the material but also has a major impact on the
manufacturing cost of the products. During 2008-09, lead
prices peaked at US$2,823 per tonne in April 2008
andUSD 2,368 per tonne in January 2010

All market sizes and segments are for organized segment only
 Threats to storage battery
industry
•
§ High market share with unorganized sector:
The unorganized sector accounts for a large
proportion of the automotive replacement
battery segment(almost 55%) and these
companies sell batteries at low prices.
§
§ Threat from cheap imports: Imports pose a
significant threat to Indian battery
manufacturers and could impact sales in the
replacement market. Cheap imports, mainly
from China, for industrial batteries continue
unabated and has seen a recent spurt after the
industrial slow down .The price differential for
imported batteries is about 20%.
All market sizes and segments are for organized segment only
Segmentation

All market sizes and segments are for organized segment only
Current Capacity Scenario

All market sizes and segments are for organized segment only
Future capacity scenario

All market sizes and segments are for organized segment only
 Future capacity scenario
• Storage batteries industry to achieve 12-14.5% production
growth during 2010-13
•
• The reasons for such growth in production are :
•
a) The demand is expected to be largely driven by OEM
battery segment , which is expected to grow by 14-15%.
b) A healthy rise in demand from automotive segment is also
expected to support the growth.
c) The industrial segment is likely to grow at a relatively
slower but a healthy pace of 9-10% during the period.
•
•

All market sizes and segments are for organized segment only
 Critical Success Factor
• Sourcing of raw materials for example lead and zinc is the most
important critical success factor.
•
• More than 75% of lead demand of battery manufacturers are met by
import from other countries.
•
• e.g. of what companies are doing :
•
a) Exide has acquired two lead recycling smelters namely Leadage Alloys
(51%) and Chloride Metals (100%) in FY 09. Recently the company
has increased its stake in Leadage Alloys to 100%. Due to
sourcing of lead from their own recycling smelters, Exide is able to
buy lead at cheaper costs, i.e. at 8-16% cheaper than the market
rates.
b)
c) Amara Raja entered into a Lead supply agreement for almost 100% of
the estimated quantity as per the business plan. The Company
sources Lead from Korea ,Australia and also from Indian
All market sizes
companies, an adequate and segments
geographic deare for organized segment only
risking.
 Regulations
• In response to concerns about lead poisoning, the Central
Government of India, Ministry of Environment and Forests,
promulgated “The Batteries (Management and Handling) Rules,
2001”. Under this act battery manufacturers are required to
collect 90% of their sales volume.
•
• In May 2010 “The Batteries (Management and Handling) Rules
were amended, where it was made mandatory for all
companies to report employees’ blood lead samples every six
months.
•
• Lead prices have been highly volatile varying between US$ 1000
to US$3200 in the last 2 years. Lead accounts for almost 60%
of the cost of sales. So any hike in the tax rates are going to
directly affect the margins. In the Union Budget of 2010 there
have been two changes :Hike in excise duty from 8% to 10%
and MAT has been increased to 18% of book profits from
existing 15%.
All market sizes and segments are for organized segment only
•
 About the Company(EXIDE)
• Exide was incorporated as Associated Battery Makers
(Eastern) Ltd., on 31st January, 1947 under the
Companies Act, 1913 to purchase all or any of the
assets of the business of manufacturers, buyers and
sellers of and dealers in and repairers of electrical
and chemical appliances and goods carried on by the
Chloride Electric Storage Company (India) Ltd, in
India.
•
• The name of the Company was changed to Chloride
India Ltd on 2nd August, 1972.
•
• The name of the Company was again changed to
Chloride Industries Ltd. vide fresh Certificate of
All market sizes and segments are for organized segment only
 About the Company(EXIDE)
• The name of the Company was further changed to Exide
Industries Ltd. on 25th August, 1995.
• The Company manufactures the widest range of storage
batteries in the world from 2.5 Ah to 20,400 Ah capacity,
covering the broadest spectrum of applications.
• The Company has six factories strategically located across
the country – two in Maharashtra, one in West Bengal,
two in Tamil Nadu and one in Haryana.
• The Company’s predecessor carried on their operations as
import house from 1916 under the name Chloride
Electrical Storage Company. Thereafter, the Company
started manufacturing storage batteries in the country
and have grown to become one of the largest
manufacturer and exporter of batteries in the sub-
continent today.
All market sizes and segments are for organized segment only
 About the Company(EXIDE)
• Exide separated from its UK-based parent,
Chloride Group Plc., in 1989, after the latter
divested its ownership in favour of a group of
Indian shareholders.
•
• The Company has grown steadily, modernized its
manufacturing processes and taken initiatives
on the service front.

All market sizes and segments are for organized segment only
History of events

All market sizes and segments are for organized segment only
History (Contd)

All market sizes and segments are for organized segment only
Network and Distribution
channels

All market sizes and segments are for organized segment only
 Strong Distribution Channels
• Exide has manufacturing facilities spread
strategically across the country.
•
• Exide has the widest distribution reach among
battery manufacturers in India. It has about
38,500 retail outlets for aftermarket sales,
which is more than double its nearest
competitors.
•
• The company currently has more than 9,000 main
dealers and 210 hub offices, which it plans to
increase to 250 by end-FY11E and to 510 over
the next 2-3 years.
All market sizes and segments are for organized segment only
 Segment
• Exide is basically into 3 segments , they are :Automotive,
Industrial and Submarine.

•
 Automotive
• Exide supplies batteries to the major car and two wheeler
manufacturers in India [General Motors, Toyota, Hyundai,
TATA Motors, Maruti, FIAT, Leyland, Renault, Honda to
name a few].
• Almost 80% of cars manufactured in India use a battery
manufactured by EXIDE.
• During FY10, company’s automotive battery segment
showed a growth of 13% in sales.
• The company has also recently launched the Deep Cycling
E-bike batteries for electric bicycles and scooters and is
also in the process of developing batteries for Stop Start
All market sizes and segments are for organized segment only
Micro Hybrid vehicles
 Segment(Contd..)
Industrial


• Industrial batteries are of three types, Conventional

lead acid batteries, VRLA (Valve regulated lead acid
batteries) batteries and Nickel- Cadmium batteries.
• The Company designs and manufacture industrial
batteries in a wide range from 2.5 Ah to 20,400 Ah
in conventional flooded and Valve Regulated Lead
Acid (VRLA) design.
• In India, it sells products mainly under EXIDE, INDEX,
SF, CEIL & POWER SAFE brands and in the
international markets mainly under CEIL, CHLORIDE
and INDEX brands.
• During FY10 company’s industrial battery segment
reported a growth of 10% in sales.
• All market sizes and segments are for organized segment only
 Major Exide products: Auto
• SF Sonic: Characterized by power at
its peak throughout its lifetime, SF
Sonic is the ultimate in power-
packed batteries. Backed by the
technology of the world famous
Furukawa Battery of Japan, SF Sonic
has a formidable line up of models
for all types of 4 wheelers and 2
wheelers on Indian roads.
All market sizes and segments are for organized segment only
Major Exide products: Auto

All market sizes and segments are for organized segment only
 Exide Products-Industrial
Segment
• They are essential requirements to keep electrically
operated equipments going when the mains fail.
• Railway, Telecommunications, Defense, Mining,
Hospitals, Airlines Signaling & Communications. All
depend on Exide to fulfill their needs for Standby
Power.
• Railway Systems, from Air conditioning, Train Lighting
to Signaling, Diesel Loco Starter, and Electric
Multiple Units depend on Exide to keep running
smoothly.
• Starting with batteries for Fork Lift Trucks, Golf Carts,
Electric Wheel Chairs, etc., Exide has steadily
developed the technology for powering electric
vehicles as well as water vessels driven by battery
power.
• The special power-packs are considerably lighter and
can be recharged faster than conventional
All market sizes and segments are for organized segment only
batteries.
 Exide Products-Industrial
Segment
• Motive power batteries : Heat Sealed polypropylene Classic,
Magnum & Gen-X batteries are specially made to meet
international standards of Motive Power.
•
• Traction Batteries: Traction batteries from Exide are sold
under the Ceil & Index brand.
•
• Stand-by batteries(Telecommunications): ‘Exide PowerSafe’
series of EPST/MST/NMST/NEPST maintenance free SMF
VRLA batteries.
•
• Stand-by batteries(power plants and major infrastructure) :
Plante, HDP/NDP/OpZs Range of 2 Volt Tubular batteries.

All market sizes and segments are for organized segment only
 Exide Products-Industrial
Segment
Others are:


• Camp lamp batteries

• Mono bloc batteries
• Semi-traction batteries
• Solar PV batteries
•

All market sizes and segments are for organized segment only
 Customers

All market sizes and segments are for organized segment only
All market sizes and segments are for organized segment only
 Market Share
%Market share in India %
Automotive Batteries
- Automotive OEM 72%
Segment
70%
Organized retail

44%
Replacement Auto

Industrial
Segment Batteries 45%

All market sizes and segments are for organized segment only
Market share

All market sizes and segments are for organized segment only
Market share

All market sizes and segments are for organized segment only
 Distribution :
Hub and Retail outlets

All market sizes and segments are for organized segment only
Size of the company

•Rs.537.09Cr

All market sizes and segments are for organized segment only
Mergers and Acquisitions

All market sizes and segments are for organized segment only
M&A contd

All market sizes and segments are for organized segment only
Financials

All market sizes and segments are for organized segment only
Financials

All market sizes and segments are for organized segment only
Financials

All market sizes and segments are for organized segment only
Ratios : D/E and Current
Ratio

All market sizes and segments are for organized segment only
Ratios : PE & ROCE

All market sizes and segments are for organized segment only
 Strategies Employed by
Exide
• Cost Reduction : The company has been
expanding its production capacities to
achieve economies of scale. The company
announced plans on Oct.,2010 an
investment of Rs 375-400 crores for this
year to scale up the capacities.
 Acquired stake in 2 metals company for
supply of Lead to mitigate the risk of volatility
of price variations.
• Product Mix: Exide is also expanding its R &
D facilities to develop new technologies for
their batteries. They are developing new
product mixes.
 All market sizes and segments are for organized segment only
Current Market Share

All market sizes and segments are for organized segment only
Market share in Automobile
segment

All market sizes and segments are for organized segment only
Market share within automobile
segment

All market sizes and segments are for organized segment only
Market share within Industry
segment

All market sizes and segments are for organized segment only
Market size of Telecom Industry
segment
• Telecom

All market sizes and segments are for organized segment only
 Breakthroughs of competitors
EXIDE
Recent Technological Breakthroughs:

• Development of custom-designed battery for Nano car

for which a patent has been received.
•
• Products for Hyundai’s i20 car models which includes a
range of DIN batteries for Hyundai’s Accent and
Getz car models.
•
• Long life batteries for inverter and solar applications.
•
• Long life motorcycle batteries based on advanced
calcium technology.
 All market sizes and segments are for organized segment only
 Breakthroughs of
competitors(Contd.)
EXIDE - OTHER BREAKTHROUGHS


• Exide acquired 100% shareholding of Chloride

Metals Limited in 2007 and also acquired 51%
shareholding in 2008 and balance 49% of
Leadage Alloys India Limited in August 2010
and thus Captive smelting and refining
operations resulted not only in committed
supplies but also provides a price advantage
compared to competition

All market sizes and segments are for organized segment only
 Breakthroughs of
competitors(Contd.)
•
 AMARA RAJA BATTERIES LIMITED

•
• 2008:Amara Raja Batteries entered the two wheeler battery
segment in with the launch of Amaron Pro Bike Rider 2-
wheeler batteries, powered by VRLA (Valve Regulated
Lead Acid) technology from JCI customized by Amara
Raja’s R&D for the Indian markets. Key features are :
a) 30% higher cranking
b) First ever 60 month warranty
c) Zero Maintenance

•
• 2010:Agreement with Honda, Japan, for the development of
VRLA motorcycle batteries.
• 2010:Launch of UPS,Tribal Italia is a design marvel in the
All market sizes and segments are for organized segment only
UPS category that incorporates the best in class UPS
 Breakthroughs of
competitors(Contd.)
• Amara Raja was the first supplier of batteries
for India’s first micro hybrid vehicle(scorpio)
of Mahindra &Mahindra.
•
• Introduced the zero-maintenance automotive
batteries for the first time in India.
•
• First to introduce VRLA batteries for industrial
standby applications.
•
• ARBL is the country's first manufacturer of
maintenance-free traction batteries used in
Forklifts andAllPallet
market sizestrucks.
and segments are for organized segment only
 Breakthroughs of
competitors(Contd.)
• The company increased its large VRLA battery
operating capacity. It extended both the
medium (increase by 50%) and the small VRLA
battery capacity (extended from 1.8 million
units to 2.4 million units). This increase in the
operating capacity will not only provide
economies of large scale, but will also aid the
company cater to a larger market, as it seeks to
tap the unorganized battery sector.

All market sizes and segments are for organized segment only
 Breakthroughs of
competitors(Contd.)
 HBL POWER SYSTEMS


• Tubular gel VRLA battery introduced to Indian

market for Telecom and Solar power
applications and PLT VRLA AGM SLI battery
is the first for the automotive sector.
•
• A joint venture in Saudi Arabia with the
AlShuwayer group that will focus on lead
and industrial battery demand in the MENA
region.
All market sizes and segments are for organized segment only
 Future Work
• Detailed analysis of Financial performance,  Sales , Growth and
Profitability of Exide and its competitors.

•
• Segment wise analysis

•
• Analysis of different cost

•
• Analysis of Past Strategies of Exide that has followed and their
current strategies and analysis of Competitor strategies.

•
• SWOT analysis of EXIDE and other competitors.

• All market sizes and segments are for organized segment only
• New Product Launches and Target markets.
Thank You

All market sizes and segments are for organized segment only