BATTERY INDUSTRY

IN INDIA
 Automotive –  Industrial - a) UPS
a)OEM b) Inverter
b) Replacement c) Telecom
d) Solar
e) Submarine
f) Railways,
g) IT/ITEs, etc
A Quick Look at EXIDE
LEAD batteries are primarily used currently. In these batteries, Lead
and Lead Alloys for nearly 80% of the Raw Material Costs (from
Annual Reports of Exide and Amara Raja).

There are some other types of batteries such as Nickel-Cadmium

and Lithium; however, lead batteries are the most frequently used
ones.

Lithium batteries are a superior technology, but currently they are

too expensive for automotive and industrial usage.
AUTOMOBILE BATTERIES IS PREDOMINANTLY A
2 – PLAYER MARKET

 EXIDE  AMARA RAJA

Together they command 90% of the organized

Automobile Battery Market. The only other
noteworthy producer is Tata Green.

Exide still leads in Market Share in the OEM

segment of 2/4 – wheelers as well as the
Replacement Market, but Amara Raja now has a
substantial share in both.
Exide’s growth lagged behind that of Amara Raja for several years from
2009 onwards, because Exide chose not to expand capacities
anticipating a slow-down in the economy, whereas Amara Raja
continued to successively expand its capacity over the years.

From 2010 – 2016, Amara Raja increased its automotive battery capacity
from 4.2 million units to 8.25 million units which they intend to increase to
11 million units, and for 2-wheelers from a mere 1.8 million units to a
whopping 11 million units which they further plan to increase to 25 million
units over 4 years.

However, this has changed since 2015, from when Exide restarted
making investments in capacity expansions.
 INDUSTRIAL BATTERIES

In the Industrial segment, Exide is very strong in Inverters, UPS,

Submarines(Monopoly).

However, Amara Raja controls the Lion’s share in Telecom which it

managed to secure due to the Technological superiority in
developed due to its tie-up with Johnson Controls. However, Exide
has tied up with partners to get over that dis-advantage in the last
few years. It is also getting aggressive with the pricing in this
segment.
In 2015, with a change of Management, the company increased its CAPEX
plan from Rs. 350-400 crores for the last several years to 800 crores.

In the fourth quarter itself, Exide suffered fall of 34% in automotive inverters
as demand shifted to tubular batteries, he told analysts. On the capacity
front, Exide would raise production capabilities in the automotive segment
from present 12.2 million units to 13.8 million by the end of this year.
In industrial segment current capacity is 2.8 billion ampere hour, which will
increase to 3.2 billion ampere hour from the capex infusion. The move is
necessitated by the fact that revival in demand for automobile batteries is
pushing up capacity utilisation and soon, if new capacity is not added,
Exide would not be able to exploit demand triggered by revival in
consumer spending.
Capacity utilisation in the automotive segment has grown substantially to
79% from 72% year ago. In the motor cycle batteries, utilisation touched
82%, up from 77%. Industrial utilisation improved from 68% to 81%.
Apart from automobile segment, Exide plans to cash in on expansion in
telecom sector where batteries are needed to run cell towers. "Under the
industrial battery segment, big growth during the March quarter came from
telecom segment at 134%.“

http://www.dnaindia.com/money/report-exide-plans-rs-800-crore-capex-
to-cash-in-on-auto-boom-and-stay-relevant-2082916
In 2016, EXIDE came up with a proposal of making CAPEX of Rs. 1,400 crores
over two years for technology upgradation and expansion of capacity.

The new batteries were expected to have a life greater than 15-20%, and were
exclusively meant for the replacement market and NOT for OEMs.

http://economictimes.indiatimes.com/industry/indl-
goods/svs/engineering/exide-to-pump-in-rs-1400-crore-haldia-expansion-
capex-at-rs-700-crore/articleshow/53286727.cms
In 2017, Exide announced an investment of Rs. 300 crore for motorcycle batteries
under the “punched-grid” technology introduced for the first time in India.

Exide has increased its annual production capacity by 1.2 million to 15 million
batteries.

Exide’s Haldia factory, set up in 1981, will be further expanded at an investment of

Rs120 crore, Chatterjee said, adding the company was going to set up a smelting
unit for which the state government had agreed to provide 25 acres.

Exide increased lead prices by 7% due to increase in lead prices by 10% over the
last few months.

Demonetization had hit motorcycle battery demand by 30%.

The share of the unorganized sector in the replacement market is around 37%.

http://www.livemint.com/Industry/YBZh0HJOE5XCx0Ym3pWc6J/Exide-to-invest-
Rs300-crore-to-expand-capacity-in-West-Benga.html
As of 2016, EXIDE had a capacity of 34.2 million units of automobile
batteries (including batteries for motorcycles – 22 million units) annually,
and over 2,824 million ampere-hours of industrial power every year.

EXIDE has 9 factories across India.

EXIDE has sound financial management which is evident by the
• Steady and High Dividend Payout Ratio
• The Working Capital Cycle
• The salary structure of the Top Management (Compare with Amara Raja)

However, the idea of buying out the ING Insurance business in 2013, could be
though of as a case of poor Capital Allocation or “diworsification”, although the
business has grown since then.
 EXIDE’s business Divisions
1. Battery division

2. Life Insurance

In 2016, Exide Life Insurance Company Limited, which is a 100%

subsidiary, is engaged in the business of life insurance and providing
financial investment products. The total premium collected during the year
ended March 31, 2016 was Rs. 2,016.24 crores. The Company recorded a
profit of Rs. 88.76 crores against a profit of Rs. 65.26 crores in the previous
year.

3. Lead Smelters

The consolidated net sale of Chloride Metals Limited was Rs.1,007.68

crores and the profit before tax was Rs. 24.15 crores.
The lead smelters allow EXIDE to have some respite from rising Lead costs
when Lead prices increase. However, as can be seen from the numbers,
they are a drag on the consolidated margins.

Exide has decided to expand the Lead Smelting Capacity in its West Bengal
Plant by making an investment of Rs. 120 crores.
IMPORTANT EXTRACTS FROM
EXIDE’S ANNUAL REPORTS
2013
Your Directors are also pleased to announce that your Company has
fully regained its market share in automotive batteries in
replacement market which was partially lost during the previous
couple of years mainly due to capacity constraints. Your Company
continues to remain the preferred supplier for almost all vehicle
manufacturers in India and apart from domestic consumption, orders
have also been received for supply of batteries in vehicles for the
export market. Your Company is also the only domestic supplier of
lithium-ion batteries for electrical vehicles to Mahendra-Reva
Net sales of Industrial batteries for the year ended 31st March, 2013 was around Rs. 2160
crores, as against last year's sales of around Rs. 1801 crores, registering a growth of around
20%, in terms of value with a corresponding volume growth of around 9%. Your Company has
been able to increase its market share in the domestic market, despite adverse
economic conditions. Overall Infrastructure business has shown a volume growth of 15%,
mostly contributed by Solar and Projects segments. Recent up surge in Solar applications has
helped your Company to achieve a healthy value growth of 80% followed by a robust 33%
growth in Projects. However, there is a slowdown in Telecom, Traction and Power segments. In
the Fast Moving Industrial Battery segment, sales recorded a growth of around 28%.While your
Company has been able to maintain its share with major UPS OEMs, Trade sales registered a
comfortable growth of 12% by volume and 27% by value.
During the year your Company, which previously held 50% of the equity shares of ING
Vysya Life Insurance Company Limited (IVL), acquired the remaining 50% of the equity
capital of the said Company from the other shareholders. Consequently, IVL has
become a 100% subsidiary of your Company. IVL headquartered at Bangalore is engaged
in the business of life insurance and providing financial investment products. The total premium
collected by the said Company during the year ended 31st March, 2013 was Rs. 1736.72
crores which was around 4% higher than the previous year. The said Company recorded a
profit of Rs. 23.07 crores against a loss of Rs. 31.15 crores in the previous year.
Sales of automotive batteries registered an overall value growth of 18% as compared to that of
the previous year. Though the aftermarket in the four and three wheeler battery segments
registered a handsome unit growth of 21% there was 7% de-growth in OEM in the same
segment. This de-growth was mainly due to the all round stagnation in certain sectors of the
automobile industry as well as your Company giving up some unprofitable OEM business.
However, inspite of a meagre growth of 2% in two-wheeler sales your Company registered a
unit growth of 19% in this segment as compared to the previous year.
Mr. T V Ramanathan, Managing Director and Chief Executive Officer will be retiring
from the services of the Company with effect from the close of business on 30th April,
2013. Mr. Ramanathan joined the services of the Company in 1995 and was appointed the
Managing Director & Chief Operating Officer in April 2000 and took over the responsibilities as
Managing Director & Chief Executive Officer since May 2007. Your Board of Directors wishes to
record its sincere appreciation for the services rendered by Mr. T V Ramanathan during his long
association with the Company.

Your Board of Directors at its meeting held on 29th April, 2013 appointed Mr P K Kataky as
the Managing Director and Chief Executive Officer with effect from 1st May, 2013. Mr
Kataky has been heading the automotive business of the Company as Director-Automotive
since March 2005. At the said Meeting, your Board of Directors also appointed Mr Gautam
Chatterjee, presently Director-Industrial, as Joint Managing Director with effect from 1st May,
2013. Mr Chatterjee, will be heading the automotive and submarine batteries business of your
Company. At the said Meeting, Mr Subir Chakraborty was also appointed as additional and
whole time Director to be designated as Director - Industrial, with effect from 1st May, 2013. Mr
Subir Chakraborty will hold office upto the ensuing Annual General Meeting of the Company. A
Notice has been received from a Member under Section 257 of the Companies Act, 1956
proposing the appointment of Mr Subir Chakraborty as a Director at the ensuing Annual
General Meeting.
2014
Sales of Automotive batteries had a flat growth rate by value in 2013-14
as compared to that of the previous year. The aftermarket sales of
fourwheeler batteries witnessed an overall de-growth of 8% in units,as
compared to the previous year. However, in the two wheelers
aftermarket there was a growth of nearly 5%. Sales of batteries in the
four wheeler OEM segment was less by 7% in units during the year.
However, in OEM two wheelers there was a minor growth of 1% in
sales as compared to that of the previous year.
Sale of Industrial batteries during 2013-14 was Rs. 2065 crores as
compared to Rs. 2614 crores in the previous year. Inspite of the
extremely difficult market conditions, positive growth was witnessed in
the Solar, UPS trade, Railways and Traction sectors. Major inroads
were made in the Telecom segment not only through aggressive
marketing but also due to introduction of newly developed cost
competitive products.
Your Company entered into technical collaboration and assistance agreements with East
Penn Manufacturing Company Inc. USA, (East Penn), a leading US manufacturer of high
quality lead-acid battery and accessory products. Under these arrange-ments, East Penn is
providing technical technical assistance and support to the two captive smelters of your
Company located near Pune and Bangalore. Apart from the above, your Company has on-going
agreements with Furukawa Battery Company Limited, Japan for Lead-Acid Storage Batteries
including VRLA motorcycle battery and Maintenance -Free Batteries for 4 -wheelers and for Idle
Stop-Start (ISS) Automotive batteries. Your Company also has agreements with Shin-Kobe
Electric Machinery Co. Limited, Japan (a part of the HITACHI Group) for a variety of lead-acid
batteries and components used for starting, lighting and ignition of automobile and VRLA
batteries for industrial applications.
Recently, your Company also entered into a new a Technical Licence and Assistance
Agreement with Shin-Kobe Electric Machinery Co. Limited, Japan to implement new
manufacturing processes for producing cost competitive quality automotive batteries
2015
Sales of Automotive batteries had an impressive growth rate of 10% by
value in 2014-15 as compared to the previous year. The aftermarket
sales of four wheeler batteries witnessed an overall growth of 17% in
units from the previous year. In the two wheelers aftermarket, the
growth rate during the year was nearly 11%. Sale of batteries in the
four wheeler OEM segment was however lower by about 2% in units
during the year. In the OEM two wheelers, the Company witnessed a
growth rate of 5% in sales as compared to that of previous year.
Sale of Industrial batteries showed a very impressive
growth of 24% from the previous year. Almost all the
segments contributed towards this effort. Major inroads
were made in the telecom segment not only through
aggressive marketing but also through introduction of
newly developed products.
 GOOD EXPORTS MARKET

The Export of Automotive Batteries recorded a remarkable growth of 64% in

quantity and 42% in value compared to the previous year, whereas the export of
Industrial Batteries, Home UPS and Solar Systems recorded an impressive growth
of 40% in value as compared to the previous year.

The Automotive growth is accredited to the quantity growth of 45% for 4-wheeler
batteries and 100% for motorcycle batteries in Bangladesh and Sri Lanka, whereas
the Industrial growth is primarily due to extraordinary growth of 240% in Standby
Business mainly due to focussed and enhanced activities in African continent,
where your Company grew by 139%.

Successful new inroads were made for export of Industrial Batteries in UAE,
Cyprus, Kuwait, Yemen, Egypt, Italy, Peru, Poland, Bahrain, Ghana, Rwanda and
Zimbabwe. Home UPS continued to be key focus segment where new additions of
markets like Lebanon, Burundi, Afghanistan, Egypt and South Africa were made.
2016
Sales of Automotive Batteries had a growth rate of 4.3% by volume in 2015-16 as
compared to the previous year. The aftermarket sales of four wheeler batteries
witnessed an overall growth of 10% in units from the previous year. In the two
wheelers aftermarket, the growth rate during the year was nearly 14%. Sale of
batteries in the four wheeler OEM division was however lower by about 2% in units
during the year. In the OEM two wheelers, the Company witnessed a growth rate of
3% in sales as compared to that of previous year

Although the market in general for Industrial Divisions remained subdued for the
greater part of this year, your Company was successful in registering double digit
growth for both Institutional UPS and Traction divisions.
Your Company has also geared up to expand rapidly in the Telecom Division,
which is showing great promise going into the future. The Advanced VRLA designs
in 2V VRLA have already been tested and found to be much superior in charge
acceptance and performance and are expected to bolster your Company's
presence in the market. The Solar Division has also been under focus where
your Company has introduced new products in the cost-effective range
thereby enhancing its competitiveness in the market place.
Your Company also has agreements with Hitachi Chemicals (formerly Shin-Kobe Electric Machinery Co.
Limited), Japan for a variety of automotive and VRLA industrial products. Recent collaborative work
between the two companies has resulted in the launching of an advanced VRLA solution for the
ever-growing telecom market with un-matched life expectancy. Apart from the above, your Company
also has ongoing technology cooperation agreement with Furukawa Battery Company Limited, Japan for
advanced, maintenance free batteries for 4 wheelers as well as for VRLA batteries for 2-wheelers.
Mr. P. K. Kataky, Managing Director and Chief Executive Officer will be retiring from
the directorship of the Company with effect from the close of business hours on
April 30, 2016. Your Board of Directors wishes to record its sincere appreciation for
the services rendered by Mr. Kataky during his long association with the Company.

Your Board of Directors at its Meeting held on April 27, 2016 appointed Mr.
Gautam Chatterjee as the Managing Director and Chief Executive Officer
with effect from May 01, 2016. Mr. Chatterjee joined the services of the Company
in 1982 and was appointed a Whole-time Director on May 13, 1996. Mr. Chatterjee
became the Joint Managing Director with effect from May 01, 2013 and was
heading the automotive and submarine battery business of the Company. At the
said Meeting, Mr. Arun Mittal was appointed as an Additional and Whole-time
Director to be designated as Director-Industrial, with effect from May 01, 2016. A
Notice has been received from a Member under Section 160(1) of the Companies
Act, 2013 proposing the appointment of Mr. Arun Mittal as a Director at the ensuing
Annual General Meeting.
EXIDE’S SHAREHOLDING PATTERN

The Promoters hold 45.99% shares.

One Major institutional change which occurred was the Sale of Nalanda
Fund’s stake of 3.75% in the September 2016 quarter.

Individual Shareholding has also gone up from 10.28% – 12.18%

EXIDE’S PRICE CHART
EXIDE’S FINANCIAL PERFORMANCE AND
RATIO ANALYSIS OVER THE YEARS
From Ace Equity
 SOME INFORMATION BASED ON MY
INTERACTION WITH SOME DEALERS AND
MANAGEMENT

&

VALUATIONS
THANK YOU!!