Exide Industries Limited

2013-14 Performance


The battery industry in India had a definite set back during 2013–14. Automobile sector had 4% growth  in 2013–14.  Utility vehicles sales continued to remain flat. The performance of commercial vehicles declined sharply by around 19%, out of which medium and heavy commercial vehicles sales declined by over 22%. The only redeeming feature was the two wheelers sales which grew by a modest 7% during 2013–14 due to which the overall automobile industry grew by a meagre 4% in 2013–14.

In the industrial battery segment, 2013–14 continued to be a difficult year with negative sentiments being exhibited across most of the infrastructure sectors. Since several infrastructural projects were held up due to various bottlenecks,this had an adverse impact on the sale of industrial batteries.


Performance
Exide Industries Limited recorded a net sale of Rs.5964.2 crores in 2013–14 as compared to Rs.6071.4 crores in the previous year with a corresponding profit before tax of Rs.723.1 crores as compared to Rs.742.3 crores in the previous year.

Exide Industries Limited, however undertook several cost cutting measures and also rationalized its product mix and was therefore able to maintain its profitability inspite of a lower top line growth.
Automotive Batteries.


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.

Exide Industries Limited continues to remain the preferred supplier to most of the vehicle manufacturers in the country. It supplies batteries for almost all the new vehicles launched during the year.

Apart from lead acid batteries,Exide Industries Limited  is the only domestic supplier of lithium–ion batteries for electrical vehicles manufactured by Mahindra–Reva.


Industrial Batteries

Sale of Industrial batteries during 2013–14 was Rs. 2065 crores as compared to Rs. 2614 crores in the previous year. 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.





New range of products introduced in the Inverter battery segment have been well received in the market. However, Tubular Inverter battery, where Industrial SBU is very strong in the market, had substantial de–growth due to poor demand arising out of moderate weather conditions.


Submarine
Sales of submarine batteries was Rs.43.20 crores during 2013–14. Exide Industries Limited continues to be the sole supplier of submarine batteries to the Indian Navy and it is also an accredited supplier to the Admiralty Shipyard, Russia. Efforts are ongoing for securing export orders for submarines being manufactured in other countries also.


Home UPS

Due to strategic reasons and synergistic benefits, Exide Industries Limited acquired two Home UPS manufacturing units in the State of Uttarakhand. The products manufactured  are based on the superior Sine–Wave technology and have been very well accepted in the market. The Company is also considering manufacture of both solar and non–solar versions of HKVA range of inverters both for the domestic as well as the export market.

Exports
Export of automobiles batteries recorded an impressive growth of 21% in value as compared to the previous year. The overall export of Industrial batteries in value recorded a growth of 10% during 2013–14.
Apart from its traditional bases, Exide Industries Limited forayed into new markets in S.E.Asia, Africa and Spain for export of automotive batteries. In Industrial batteries, successful initiatives were taken to export batteries to new markets in Africa and efforts are under progress to consolidate this market. Apart from the same, industrial batteries were also exported to the  Company's two wholly owned overseas subsidiaries,viz.Chloride Batteries S.E Asia Pte Limited, Singapore and Espex Batteries Limited,UK.


Technology Upgradation

In order to maintain its leadership position the  Company is continuously upgrading its technology and also acquiring new technology to meet the ever increasing demands of its customers. The in–house R&D Division is recognized by the Council of Scientific and Industrial Research, Government of India. The R&D Division is actively engaged in creation of innovative products through improvements in manufacturing processes and materials with a continuous focus on cost reduction.

The 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 arrange­ments, East Penn is providing technical
assistance and support for the manufacture of automotive, motive power, standby, telecom, UPS, solar and traction batteries for the  Company's various plants in India. East Penn is also providing technical assistance and support to the two captive smelters of the Company located near Pune and Bangalore. Apart from the above, the 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, the 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.





Business Operational Excellence

Stretching over one and a half decade, the TQM system has been continuously improved and upgraded to fulfill the stringent and changing requirements of customers, as well as to meet the strategic challenges of the business. International standards of Quality, Environment, Occupational Health & Safety; the latest techniques of Total Productive Maintenance (TPM), Lean Manufacturing, 6–Sigma and various problem solving tools constitute the TQM framework for the Company's endeavour towards Business Excellence.

The sophisticated techniques of Advanced Product Quality Planning (APQP), Failure Mode & Effect Analysis (FMEA), Statistical Process Control (SPC), Measurement System Analysis (MSA), Process Capability Studies, Poka Yoke (mistake–proofing) and cut–open analysis of products are used to ensure adherence to specifications, continuous monitoring and measurement, and minimal scrap / rework, aimed towards maximizing customer satisfaction and efficient use of resources.
With respect to the Quality Management System (QMS), the Automotive SBU is certified to ISO/TS–16949:2009 and the Industrial SBU and Submarine SBU to ISO 9001:2008. The certifications awarded, after rigorous auditing by the renowned Certification Body TUV–Nord (headquartered in Germany), including all business processes of Corporate, R&D,

Manufacturing, Marketing, Sales and After–Sales–Service.

Keeping up the momentum and carrying the tradition forward, Haldia plant has won the Award for Most Significant Improvement in TQM from CII in 2011 and Productivity Award from CII for 2013–14. As a mark of recognition your Company has won several awards and accolades during the last few years from valued customers like Toyota, Tata Motors, Bajaj, Suzuki, Mahindra & Mahindra – to name a few. Your Company has also won acclaim and recognition award for Design & Development from Maruti Suzuki in 2013–14. In recognition for its efforts towards other stakeholders, the Chinchwad plant in 2013 has won the Renault Special Prize for Coordination of Supplier Forum and also Quality Award for PPM achievement from John Deere in 2013. The QC teams from Shamnagar, Haldia and Hosur plants have been regularly winning awards and prizes at state and national levels from Quality Circle Forum of India and CII.
Our concept of Excellence extends to improvements in efficiency and effective utilisation of plant and equipment. Towards this important objective, your Company has implemented Total Productive Maintenance (TPM) in the factories. The best methodology as defined by the Japanese Institute of Plant Maintenance (JIPM) is being followed. In recognition of its efforts in TPM, the JIPM has conferred the "Award of TPM Excellence" to Haldia plant in 2008, to Hosur and Chinchwad plants in 2010 and to Taloja plant in 2011. The Shamnagar and Bawal plants are expected to achieve it in the near future. Efforts are on to reach higher levels of achievement.

Environment and Safety
In line with its core value of being recognized as a responsible corporate citizen, an effective Environment Management System (EMS) has been designed and implemented in your Company. The Shamnagar, Haldia, Hosur, Taloja, Chinchwad and Bawal plants are certified to ISO 14001:2004. Rigorous surveillance audits by TUV–Nord has proved that your Company not only fulfills all applicable statutory and regulatory environmental norms, but has also continuously improved its environmental performance over the years.

Keeping in line with global expectations and stakeholder interests, the Environmental Policy has been revised in March 2014 to make it more stringent and forward looking towards sustainability. Optimal utilization of resources, minimization of waste, prevention of pollution and minimizing the adverse impact of activities, products and services continue to be fundamentals of the Environmental Policy, while new dimensions have been added like, reducing carbon footprint, promotion of energy efficiency and introduction of environment friendly technologies. Your Company's commitment extends to supporting other stakeholders in the value chain.
As part of the QMS and EMS, various improvement projects are undertaken to improve quality, conserve energy and reduce cost and any adverse environmental impacts. The Hosur plant has obtained "3–Star" rating in E–H–S from CII for2013.
The issue of Occupational Health & Safety (OH&S) of employees continue to be a focus area in your Company. We not only comply to all applicable legal and other OH&S requirements but also ensure that all operations, processes and activities are aimed towards prevention of injury and ill health. This commitment is demonstrated through the implementation of the OHSAS 18001:2007 international standard in the factories. The Hosur and Taloja plants have been certified, and other plants are expected to be so in the near future.

Corporate Social Responsibility
Your Company's well entrenched CSR philosophy recognizes the following areas as the thrust areas for its activities – Environment, Healthcare, Basic Education, Women's Empowerment and Community Development.

Your Company's factories in the far flung areas of the country develop and execute their own annual agenda for CSR work in the immediate vicinity. Within the broader framework of your Company's CSR policy, individual factories develop their own annual plan of action based on their interactions with the local community leaders and execute them throughout the year.
These activities typically involve running health camps in villages, helping the local community develop their social infrastructure like schools, health centers or village roads, planting of trees in environmentally sensitive areas to check soil erosion, flood relief work etc.

At a national level your Company's works with the noted international body of UNICEF to improve the health and environment of children in rural India under its WASH (Water, Sanitation and Health) program. The association has been working successfully since 2009 whereby a fixed amount is donated to the global body for every used battery that is returned to the Company us by the customers. This serves several socially desirable purposes. On the one hand it encourages customers to return used batteries that are recycled in an environment friendly manner, on the other it also generates funds for health and sanitation work in rural India where safe sanitation projects are undertaken by UNICEF. Through this activity your Company's customers also feel integrated into the overall CSR activities of your Company by being an active participant in the effort.
The national activity through UNICEF is supplemented by other local activities through reputed NGOs. In Kolkata, near your Company's headquarter, in active collaboration with the reputed NGO, CINI–Asha, basic education of some 150 slum children in the age group of two to six years is being provided on a sustained basis.




The Company has the advantage of having a product range covering a broad spectrum of applications, viz. Automotive, Infrastructure, Power,Telecom, Information Technology, Agriculture, Defense, etc. Technologically superior products coupled with a wide distribution and after–sales service network are the strengths of your Company. Apart from a strong presence in the existing segments, your Company had made forays into new areas such as batteries for electric and hybrid cars and two–wheelers and in the development of environment friendly storage power alternatives. With green and renewable energy being in focus, your Company has also geared itself to offer products catering to this segment and the initial response has been highly encouraging.

Your Company continues to invest in up–gradation and expansion of its manufacturing capacities. The in–house R&D Division has been consistently developing quality products and is also striving for achieving cost efficiencies. Your Company receives strong support from its Foreign Technical Collaborators not only in the form of sharing of new technology but also by receiving assistance in upgrading manufacturing and other processes which results in technologically superior products with sustainable quality.
Competition in the domestic battery industry is on the increase with not only the existing players being more aggressive to increase their market share but also with several new companies, including leading international players, making forays in this business. Though competition leads to better quality and service, it may also result in over capacity and predatory pricing thereby creating pressure on margins.


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