Post-GST, Exide eyes share in unorganised battery market

Battery maker Exide Industries Ltd is eyeing a larger share of the unorganised battery market after implementation of the Goods and Services Tax (GST), a top company official said on Thursday.

According to the official, GST provides a unique opportunity for organised players as the small-scale sector earlier was mostly not paying taxes and the differentiation of prices of the batteries of organised and unorganised players in the industry was high.

"Following GST implementation, it is almost inevitable that everyone will have to pay taxes. As a result, organised sector will get substantial share out of the unorganised sector," Exides MD and CEO G. Chatterjee told shareholders at the 70th Annual General Meeting.

"The company has strategised itself to get this opportunity by putting the Dynex brand, a low-cost battery to penetrate the unorganised market. We are targeting small-scale manufacturers and distributors to distribute this battery and thus increase our market share," he added.

Chatterjee said organised market comprised 65-70 per cent of the battery market, while the unorganised players had a share of 30-35 per cent. "We should be doing one million (Dynex) batteries by end of this year. The replacement battery market size will be close to 20 million a year, including organised and unorganised."

He said the GST benefit, as per the company's calculations, came to around 1.7 per cent. "On the weighted average basis, the battery prices have come down by 1.7 per cent. So, the net benefit of GST is neutral."

Meanwhile, the battery maker on Thursday reported a 3.5 per cent fall in its net profit to Rs 189 crore in the quarter ended June 30, as compared to Rs 196.05 crore in the year-ago period. Its revenue from operations in the quarter under review stood at Rs 2,376.36 crore as compared to Rs 2,264.92 crore in the corresponding quarter last year.

During 2015-16, the battery maker had chalked out a cumulative Rs 1,400 crore investment plan. In the first phase, with an investment of Rs 700 crore in 2016-17, it commenced its new Haldia plant, which manufactures next-gen automotive batteries using new punched grid technology.

"The balance Rs 700 crore will be distributed among the rest of the manufacturing plants in 2017-18. We will be introducing robotics technology to meet global standards," said its latest annual report.

The battery maker is also looking to greenfield expansions and it applied before Kolkata Port Trust to get "extension land" of 25 acres adjacent to its Haldia plant and also requested Haldia Development Authority for another 25 acres land for smelting plant for which Rs 100 crore investment would be done, Chatterjee said.

On the out of court settlement with the US-based Exide Technologies over the usage of Exide trademark in India, Chatterjee said, aceDiscussion with the US company is still on and things are "progressing".

He also said the battery industry might face some disruptive challenges but lead acid battery market would be there for at least next 10 years. The usage of lead acid battery would likely be reduced for automotive segment but new applications of energy storage and solar would come.

"Apart from this, battery market for e-rickshaw has been emerging and it has spontaneously gone up. We look at the e-rickshaw battery market as an alternative of inverter market. We estimate one million e-rickshaws running across the country," Chatterjee said.

--IANS

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