Recharging Exide

Three years after Rajan Raheja wrested management control of the battery major from the redoubtable Sudarshan Kumar Birla, Exide Industries, the former Chloride Industries is all charged up. With a 42 per cent growth in net sales, the Rs 510 crore Calcutta-based company has emerged as an undisputed leader both in automotive and industrial batteries.

And now, with a new factory at Hosur in Karnataka and another likely one at Haryana, a clutch of new products, foreign tie-ups and a greater export thrust, Exide is hoping to double turnover by the year 2000. Says CMD Satya Brata Ganguly, Our vision is to emerge as the largest automotive battery manufacturer in Asia with a five million unit capacity by the turn of the century.

It isnt a tall order. The advent of global auto makers opened up new vistas for Exide. In order to maintain its lead over rivals like Standard Batteries and Amco, the company realised that it had to be the first to sign up supply contracts with the new players. The strategy paid off with almost every auto major riding on the power of Exide.

The company has just signed a three-year contract with Japanese giant Mitsubishi Motor Corporation for powering the conglomerates Lancer models. It will enable Exide to develop and design exclusive products to meet Mitsubishis requirements for the future. It is currently talking to Hyundai.

Exides association with Maruti-Suzuki has been right from the drawing board stage and today it commands 60 per cent of the countrys largest auto makers requirements. It is the sole supplier to South Korean major Daewoo Motors battery requirement of the Cielo model. Besides, it also has a 78 per cent share of Mercedes Benzs requirements in India and an over 80 per cent needs of Premier Automobiles two joint ventures for manufacturing Peugeot and Uno models.

Catering to Indian and foreign players has seen Exide grab a 60 per cent share of the Rs 600 crore organised automotive batteries market. The unorganised sector, which is one-and-a-half times that of the organised one, has a strong presence in trucks and LCV batteries.

Exide managers attribute its good run in the Original Equipment (OE) segment to ensuring just-in-time (JIT) supplies. We realised that dependability coupled with adhering to a strict delivery schedule can give us a winning edge vis-a-vis our competitors, says S Chand, director automotive batteries.

Exide has followed the JIT concept to woo its largest customer, Maruti. For instance, Exide personnel are stationed at the Maruti factory. Their job is to attend to any complaints and ensure that only fresh batteries move to the assembly line. A similar deal is being negotiated with Daewoo.

The importance of timely battery supplies can be understood from the fact that sale of a Rs 3 lakh vehicle can be held up just because batteries worth just Rs 2,000 are not delivered on schedule. This places an additional responsibility on us to meet the supply schedules, Chand points out.

This high priority for OE is largely due to the bulk requirement which compensates for relatively lower margins. OE batteries are priced 10-15 per cent lower than the replacement batteries. Besides, the OE market exercises a strategic leverage over future replacement growth.

The replacement market is dominated by the unorganised sector. With a 70 per cent slice of the market, the small scale players offer products that are almost 40 per cent cheaper. And Exide realised that the only way it could combat it was by offering a high degree of value addition. Today, Exide has a 22 per cent slice of the total replacement and is the leader among organised players, followed by Standard Batteries.

Wooing drivers

A recent market study revealed that automotive batteries were a low concern product having a grudge purchase syndrome. Experience shows that batteries are generally a first-blame product, as customers generally tend to link up any technical problem with battery failure. Hence, we decided to take out the stigma by freeing the customers of all hassles, says Chand.

So, the Exide Freedom range was launched, with peace of mind as its unique selling proposition (USP). The next step was to unveil maintenance-free batteries designed to suit Indian conditions. Hence the slogan: Fit it and forget it.

Another breakthrough for Exide has been the two-wheeler market. With India being the number two producer of two-wheelers, Exide banked on this to fulfill its global vision.

In 1993, there were only seven types of batteries in India, while over 37 different grades were sought by foreign two-wheeler companies. Exide began developing new product ranges for the international market. Today, it has a battery for every customer, both at home and abroad. It is one of the leading vendors to players like Piaggio and Malaguti Moto of Italy.

From being a marginal player in two-wheelers four years ago, Exide has become the second largest manufacturer of such batteries with an annual capacity of one million units. It now plans to double capacity to make further inroads into the export market.

The industrial push

Another thrust area is the industrial segment. With investments pouring into infrastructure, Exide senses immense opportunities here. It has already upgraded its product base to meet the needs of the telecom, power, railways and defence sectors. And it is now looking at new markets.

The industrial batteries division grew by 73 per cent last year, with turnover touching almost Rs 150 crore. It currently contributes 27 per cent to the bottomline. This is likely to go up to 50 per cent by the turn of the century.

The industrial unit has recently formed a Power Electronics Division to manufacture different types of chargers for auto and industrial batteries. It will also roll out specialised invertors to meet the needs of the retail customer.

Chloride Eastern, the Singapore-based holding company, has a tie-up with an Australian firm for Switch Mode Power Systems (SMPS). This saw Exide launch SMPS for the first time in the country.

With the conventional and sealed batteries, Exide has grabbed a 60 per cent share of the UPS market from established players like Standard Batteries and Amco. Three years ago, it had only a 25 per cent share. Says Gautam Chatterjee, head of the industrial division, We have grown by cannibalising competition. Speed has been our greatest strength and we have been stressing on high volume-low margin sales.

The proximity to customers is the outcome of Exides manufacturing facilities spread across the country. The four factories at Haldia and Shyamnagar in West Bengal and Chinchwad in Maharashtra provide Exide an installed capacity of 2.8 million units. The new Rs 45 crore state-of-the-art plant at Hosur, Karnataka, will enhance capacity by one million tonnes by the end of this fiscal. Haryana could be yet another production centre.

In a sharp departure from the past, the Rajan Raheja company is also eyeing acquisitions to augment capacities. It is currently talking to the K K Bajoria group for taking over the ailing Willard Batteries. The acquisition of the Bulandshahr-based battery outfit will provide Exide exclusive rights to manufacture and sell the international Pacesetter brand and an anchor in the northern territory.

Outward bound

The efforts are backed by an export push. Exide, a major exporter till 1991, suffered a setback following the disintegration of the erstwhile Soviet Union. Being a part of Chloride Plc then, it had been a major sourcing point for the East European block. After the collapse, Exide had to start afresh in new markets. Exports which contributed about Rs 40 crore in 1991, is around Rs 16 crore today. However, it has set an ambitious target of Rs 100 crore by the next three years.

To achieve its goal, Exide is also looking for technical tie-ups and will market its submarine batteries overseas. Until now, its major customer was the Indian Navy for the German-made HDW submarines.

It is relying on its Singapore operations for industrial battery exports to Asean countries. Our next destination will be to emerge as a supplier to Europe and the US, says Chatterjee.

With its plans to take on the markets both in India and abroad moving on track, Exide is all charged up to make its vision a reality by the turn of the century. Our vision is to emerge as the largest automotive battery

manufacturer in Asia with a five million unit capacity, by the turn of the century.

Satya Brata Ganguly, CMD, Exide Industries