Exide To Buy Lanka, Singapore Firms

Storage battery maker Exide Industries announced today it would take over Associated Baterry Manufacturing (Ceylon) Ltd and the Singapore-based Chloride Batteries South East Asia Pte for Rs 17-18 crore.

While announcing this, the board of the Rs 939 crore battery major said the takeover is subject to necessary permission from the Reserve Bank of India and other authorities.

The valuation of the deal was carried out by PricewaterhouseCoopers. The acquisition would give Exide a controlling stake in the Singapore-based trading company and two manufacturing units, a big one a Sri Lanka and a minor unit in Singapore.

Exide will also have the right to use its brandnames Chloride, Exide and Dagenite in the crucial markets in south-east Asia, Bangladesh, Sri Lanka and Myanmar.

 

So long, these markets were the preserve of Chloride Plc and Exide has to trade there using its surrogate brand Dynex. However, Exide Pakistan, a locally owned company, continues to own the brand in that country.

Both the companies have been bought from Chloride Eastern Industries Ltd, the Singapore-based subsidiary of Chloride Plc. Interestingly, Exide itself was acquired from Chloride Plc by the Rajan Raheja-S K Birla combine some years ago after which Birla exited from the company under pressure from creditors.

Exide will purchase the entire stake in Chloride Batteries for a sum not exceeding Singapore $ 3.8 million while the cost of picking up 49 per cent in Associated Battery will be Sri Lankan Rs 11.22 crore.

"Chloride Batteries has been buying batteries from Exide and re-exporting them. The business has been growing at a good pace. The prospects of the company was good and therefore Exide decided to buy it when it was on offer," top sources at Exide said, while explaining the rationale of the deal.

And the Sri Lankan outfit, Associated is the market leader in that country. Exide picked up Associated as "it gave the company synergy with operations in India and would also give tax advantages available to investments in Saarc countries" said sources.

Singapore too is a discerning market in the Asian region and a foothold there would give Exide a major opportunity in the years to come. The purchase would help Exide further develop its global marketing network, which would come in handy when its new range of batteries in collaboration with Shin Kobe of Japan would be launched, said analysts.

The overseas purchases were likely to put on hold Exide's plan to buy a battery plant in India. It would continue to invest in a new office-cum-factory in the Calcutta suburb of Salt Lake through its subsidiary, Caldyne Automatics, which makes charging and controller sets for its standby power sets.