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Lead Acid Battery Market – India

December 2014

2 LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT

Executive Summary

Market

Drivers & Challenges

Competitive Landscape

Lead-acid battery market in India was pegged at INR x bn in 20-- and is expected to grow at a CAGR of y% till 20--

There are two types of batteries available in the market, automotive batteries and industrial batteries, with the former having a significantly higher market share

Drivers: Growing Automotive Industry

Increasing Demand for Power Backup

Booming Renewable Energy Sector

Recycling Efficiency

Lucrative Replacement Market

Challenges: Polluting and Toxic Nature of Lead

Threat From Other Types Of Batteries

Volatility in Lead Prices

Large Unorganized Segment

Batteries (Management and Handling) Rules, 2001

Customs clearance of imports of new lead acid batteries

Responsibilities of dealer

Responsibilities of manufacturer, importer, assembler and re-conditioner

Government Regulation

Major Public Players Major Private Players

Company A Company C Company E

Company B Company D Company F

Procedure for registration/renewal of registration of recyclers

Responsibilities of recycler

Responsibilities of auctioneer

Responsibilities of consumer or bulk consumer


•Macro Economic Indicators

•Introduction

•Market Overview

•EXIM

•Drivers & Challenges

•Government Regulation

•Competitive Landscape

•Strategic Recommendations

•Appendix

4

Macroeconomic Indicators (1/3)

12

13

14

15

16

a4

Q3

c3 b3

Q2

a3

Q4

c4

b4

INR tr

c2

b2 a2

Q1

d1

c1 b1 a1

GDP at Factor Cost: Quarterly

Inflation Rate: Monthly

2013-14 2012-13 2011-12 2014-15

-2

-1

0

1

2

t

s

Oct 2013 - Nov 2013

q

Aug 2013 - Sep 2013 Jul 2013 - Aug 2013

r

Sep 2013 - Oct 2013

p

%

Nov 2013 - Dec 2013

LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT

5

SAMPLE


Modern lead-acid batteries are made up of four basic components

• XX

Factor 1

• XX

Factor 2

• XX

Factor 3

• XX

Factor 4

Lead-Acid Battery Components

6

SAMPLE


True deep cycle dry cell lead-acid batteries come in three main construction types

• XX

• XX

• XX

• XX

Type 1

• XX

• XX

• XX

• XX

Type 2

Types of Dry Cell Batteries

7

SAMPLE


Lead-acid battery market in India is progressing at a steady rate due to growing demand across sectors

Market Overview – Lead-Acid Batteries Market Size and Growth (Value – Wise)

• Lead-acid battery market in India has been exhibiting

steady growth rates for the past few years

• Market comprises two major segments, automotive

batteries and industrial batteries

Automotive batteries constitute a larger share of the

overall market

However, industrial batteries which are currently exhibiting

a better growth rate than automotive are expected to

narrow the gap within a few years

• Indian market is duopolistic in nature with the top 2

players, Exide Industries Ltd. and Amara Raja

Batteries Ltd., controlling x% of the organized market

Industry enjoys strong pricing power due to its inherent

duopolistic nature

Passenger vehicle space is dominated by Exide and Amara

Raja due to their strong tie-ups with recognized

international players

Unorganized players dominate the lower end of the

replacement market (commercial vehicles and tractors)

due to the price sensitive nature of the segment

Market Segmentation (Value – Wise)

D

C

B

A

0

X

2018e

x5

2017e

x4

2016e

x3

2015e

x2

2014

x1

INR bn

x

y

B A

2014

x

y

2018e

8

SAMPLE


Industrial batteries are exhibiting a higher growth rate than automotive batteries

Market Overview – Automotive Batteries Automotive Batteries (Value – Wise)

• Automotive battery market has been growing owing

to the high demand for automobiles and increasing

vehicle production in the country

• Branded batteries comprise ~x% of the automotive

battery market with the rest being unbranded

batteries

• Exide is the clear leader in this space, followed by

Amara Raja

Industrial Batteries (Value – Wise)

D

D

C

B

A

0

INR bn

X

2018e

x5

2017e

x4

2016e

x3

2015e

x2

2014

x1

Market Overview – Industrial Batteries

D

C

B

A

0

INR bn

y5

2017e

y4

2016e

y3

2015e

Y

2018e

y2

2014

y1

• Growth of industrial batteries is being driven by the

increasing demand for inverters and UPS due to the

shortage in power supply

• South India has witnessed the strongest growth for

these batteries due to the high demand for inverters

in this region

• Although demand from the telecom space remained

flat in the previous year, increasing demand for UPS

has helped this segment grow steadily

9

SAMPLE

READY TO EAT MARKET IN INDIA 2014.PPT

Lead Acid Battery – Import

Lead Acid Battery Import (850710)

Lead Acid Battery Import (85072000)

D

C

B

A

0

C

B

A

0

‘000 Kg INR mn

2015 (Apr-Aug)

x4

y4

2014

x3

y3

2013

x2

y2

2012

x1

y1

Value Volume

x6

x5

x4

x3 x2

x1

Others

JAPAN

THAILAND

GERMANY

CHINA P RP

BANGLADESH PR

x8 x7

x5

x3

x2

x1

Others

GERMANY

SRI LANKA DSR

MALAYSIA

VIETNAM SOC REP

CHINA P RP

Note: HS Code - 850710 (Lead acid accumulators of a kind used for starting piston engines); HS Code - 85072000 (Other lead-acid accumulators)

D

C

B

A

0

D

C

B

A

0

‘000 Kg INR mn

2015 (Apr-Aug)

x4

y4

2014

x3

y3

2013

x2

y2

2012

x1

y1

Value Volume

Major Importing Nations – Value Wise

Major Importing Nations – Value Wise

2014

2014

10

SAMPLE


Rise in Telecom Towers

• Rapidly growing telecom sector is one of the largest customer segments and after the 3-G spectrum auction, telecom towers have increased considerably

• Tower industry witnessed growth rate of beyond x% for the five years post 2006, expanding the telecom tower base to over 354,000 towers by the end of 20--

• Network management facilities and significant network expansion will drive demand for backup power

Demand from Telecom Towers

Battery market will profit considerably as various sectors where…

Increasing Demand for Power Backup (2/3)

Private Hospital Market

• Need for power backup in the healthcare market is absolutely important

• Be it a storm or a general blackout, people need to be assured that the hospital will be able to sustain power and derive it from an alternate source

• Private hospitals have been growing at a phenomenal rate and the demand for power backup has kept increasing

Demand from Hospitals

400

300

200

100

0

‘000 Nos. X

2014

x4

2013

x3

2011

x2

2009

x1

0

2

4

6 Y

2018e

y7

2017e

y6

2016e

y5

2015e

y1

y4

2014e

y3

2013e

y2

2012

INR tn

11

SAMPLE


Impact

Constant development of new and more efficient types of batteries challenge lead-acid batteries

Threat from Other Types of Batteries

• A serious challenge faced by the market for lead-acid batteries is the rapid advancement in the overall battery technology

Continuous development of other types of batteries serve as a challenge to the growth of lead-acid batteries

• Lead-acid batteries have been around for over hundred years, but still suffer from certain problem areas where they can be challenged by other types of batteries

Nickel-cadmium, nickel-metal hydride and lithium-ion batteries are the main challengers to lead-acid batteries

• Bulky and heavy nature of lead-acid batteries compared to other batteries is an area of concern

Lead-acid batteries fare poorly when it comes to the Gravimetric energy density which is measured in the unit, kilowatt per kilogram (KW/KG), and is an important parameter to compare different battery packs

Comparative Analysis of Different Types of Batteries

Parameter Lead-Acid Nickel-

Cadmium Nickel-Metal

Hydride Lithium-Ion

Gravimetric Energy Density (KW/KG)

a - b c - d e - f g – h

Nominal Voltage (V) x1 x2 x3 x4

12

SAMPLE


Lead Prices

Impact

Volatile nature of lead prices has adverse effects on manufacturing costs, thereby affecting growth

Volatility in Lead Prices

• Lead is the most important constituent of a lead-acid battery and constant changes in its price can adversely affect the market

• Prices of lead have remained extremely volatile over the years

This volatility creates uncertainty in procurement of raw materials for manufacturing batteries

It also has a major impact on the manufacturing costs of lead-acid batteries

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Jul-14 Jan-12 Jul-11 Jan-08 Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-14 Jul-13 Jan-13 Jul-12

INR/Metric Ton

x2

x1

x14 x13 x12 x11

x10 x9 x8 x7

x6

x5

x4

x3

13

SAMPLE


Batteries (Management and Handling) Rules, 2001 is the law governing lead-acid batteries in India

Batteries (Management and Handling) Rules, 2001 is the law governing battery regulation in India and it is limited to only lead-acid batteries

• The Batteries (Management and Handling) Rules, 2001 was issued by the Ministry of Environment and Forests (MoEF) and provided regulations for the management and handling of lead-acid batteries

• It set up an extensive reporting system for manufacturers, dealers, importers, recyclers and others in the supply chain of lead-acid batteries and stated the responsibilities of each

Batteries (Management and Handling) Rules, 2001

• Compliance of the provisions of these rules are ensured by the state level Pollution Control Boards and they have to file annual compliance status reports to the Central Pollution Control Board by 30th April each year

• Data received from the state boards each year has to be compiled and published by the Central Pollution Control Board and it also has to review the compliance of the rules from time to time to improve the collection and recycling of used lead-acid batteries

• All records and returns must be computerized

• The Ministry of Environment and Forests or an agency designated by it tracks: Distribution and sale of batteries

Collection, auction, transport and re-processing of used batteries

Sale of re-processed lead by registered recyclers

Sale of lead from all domestic producers or importers

Compliance of the rules

14

SAMPLE


Market Competition – Porter’s Five Forces Analysis

• XX • XX

• XX

• XX

• XX

Bargaining Power of Suppliers

Threat of New Entrants

Competitive Rivalry Bargaining Power of Buyers

Threat of Substitutes

Impact X

Impact X

Impact X Impact

X

Impact X

15

SAMPLE


Competitive Benchmarking (1/5)

Public Trading Comparable (FY 2014)

Company A Company B Company C

Market Capitalization (INR mn) X X X

Share Price (INR) X X X

EV/EBITDA (x) X X X

EV/Revenue (x) X X X

PE Ratio X X X

Note: Top 3 Public companies based on the Market Capitalization; Market Capitalization and PE ratio is as on 20/11/2014 and Share Price is as on 19/11/2014

16

SAMPLE


Key Ratios of Top 3 Companies – Operational Basis (FY 2013) (1/x)

Competitive Benchmarking (2/5)

0

10

20

30

40

%

Company C

z3

z2

z1

Company B

y3

y2 y1

Company A

x3

x2 x1

Net Margin Gross Margin Operating Margin

• XX

• XX

• XX

• XX

• XX

17

SAMPLE


Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address XX

Tel No. XX

Fax No. XX

Website XX

Year of Incorporation XX

Ticker Symbol XX

Stock Exchange XX

Category Products/Services

Electrical Components

XX

Name Designation

XX XX

XX XX

XX XX

XX XX

Hyderabad Head Office

Public: Domestic Company – Company A (1/4)

18

SAMPLE


Financial Snapshot Key Ratios

Financial Summary

• The company earned a net profit of INR 3.67 bn in FY 2014, as compared to net profit of INR 2.87 bn in FY 2013

• The company reported total income of INR 34.76 bn in FY 2014, registering an increase of 16% over FY 2013

• The company earned an operating margin of 14.86% in FY 2014, an increase of 0.97 percentage points over FY 2013

• The company reported debt to equity ratio of 0.06 in FY 2014, a decrease of 24.77% over FY 2013

Key Financial Performance Indicators

Indicators Value (20/11/2014) Market Capitalization (INR mn) 45,384.9

Total Enterprise Value (INR mn) 42,307.2

EPS (INR) 21.99

PE Ratio (Absolute) 33.30

Particulars y-o-y change

(2014-13) 2014 2013 2012 2011

Profitability Ratios

Operating Margin 0.97 14.86% 13.89% 12.76% 12.60%

Net Margin 1.02 10.57% 9.55% 9.02% 8.39%

Profit Before Tax Margin 1.39 15.44% 14.05% 13.36% 12.48%

Return on Equity -0.09 26.96% 27.05% 26.12% 22.93%

Return on Capital Employed -0.63 34.30% 34.92% 32.42% 29.79%

Return on Working Capital 16.39 77.67% 61.28% 57.78% 61.22%

Return on Assets 0.58 24.14% 23.56% 22.51% 19.94%

Return on Fixed Assets -23.50 67.57% 91.07% 79.34% 63.54%

Cost Ratios

Operating costs (% of Sales) -0.93 84.96% 85.90% 87.12% 87.36%

Administration costs (% of Sales) 0.47 12.50% 12.04% 13.03% 14.26%

Interest costs (% of Sales) 0.01 0.02% 0.01% 0.06% 0.08%

Liquidity Ratios

Current Ratio -6.05% 2.05 2.18 2.28 1.99

Cash Ratio -33.83% 0.49 0.74 0.59 0.17

Leverage Ratios

Debt to Equity Ratio -24.77% 0.06 0.08 0.10 0.14

Debt to Capital Ratio -23.32% 0.06 0.08 0.09 0.12

Interest Coverage Ratio -61.19% 770.79 1986.18 225.40 153.47

Efficiency Ratios

Fixed Asset Turnover -30.40% 4.49 6.46 6.16 5.02

Asset Turnover -3.89% 1.61 1.67 1.75 1.58

Current Asset Turnover 12.40% 2.64 2.35 2.52 2.40

Working Capital Turnover 18.89% 5.17 4.34 4.49 4.84

Capital Employed Turnover -7.94% 2.37 2.58 2.60 2.39

Improved Decline

Net Profit/Loss Total Income

4

3

2

1

0

40

30

20

10

0

INR bn INR bn

2014

3.67

34.76

2013

2.87

30.02

2012

2.15

23.85

2011

1.48

17.66


19

SAMPLE


Key Business Segments Key Geographic Segments*

Business Highlights

Description News

Overview • XX

Collaborations • XX

Expansion Plans • XX

100%

50%

0%

2014

100%

Lead Acid Storage Batteries

50%

100%

0%

2012

100%

India

India is the only geographic segment in which the company has been operating for the last

five years

Lead Acid Storage Batteries is the only business segment

from where the company has earned revenue for last four

years

Note: Due to lack of critical data, geographical segments graph could not be generated


20

SAMPLE

• XX • XX

• XX • XX

T O

W S


21

SAMPLE


Private: Domestic Company – Company B (1/5)

Key People

Products and Services

Company Information Offices and Centres – India

Category Products/Services

Batteries XX

UPS XX Name Designation

XX XX

XX XX

XX XX

XX XX

Corporate Address XX

Tel No. XX

Fax No. XX

Website XX

Chennai

Dehradun

Secunderabad

Guwahati

Lucknow

Chandigarh Delhi

Ahmedabad

Gurgaon

Ranchi

Bangalore

Thrissur

Indore

Mumbai Pune

Cuttack

Jalandhar

Jaipur Patna

Ghaziabad

Head Office

Branch Office

22

SAMPLE


Shareholders of the Company Ownership Structure

Name No. of Shares held

Simpson & Co. Ltd. 280,495

Tractors & Farm Equipment Ltd. 49,500

Amalgamation Pvt. Ltd. and Simpson & Co. Ltd.

1

A. Krishnamurty and Simpson & Co. Ltd.

1

S. Ramanujachari and Simpson & Co. Ltd.

1

S. Sreenivasa Raghavan and Simpson & Co. Ltd.

1

P. S. Rajamani and Simpson & Co. Ltd. 1

Total 330,000

100.00%

Note: Details of shareholders as on AGM dated 26th Aug, 2014

Corporate bodies


23

SAMPLE


Financial Snapshot Key Ratios

Particulars y-o-y change

(2014-13) 2014 2013 2012 2011

Profitability Ratios

Operating Margin -2.16 -5.17% -3.02% 2.35% 4.50%

Net Margin -1.94 -2.97% -1.02% 1.95% 3.62%

Profit Before Tax Margin -2.55 -4.48% -1.93% 3.08% 5.37%

Return on Equity -8.89 -12.87% -3.98% 6.84% 12.48%

Return on Capital Employed -10.72 -22.45% -11.74% 8.25% 15.51%

Return on Working Capital -22.21 -40.54% -18.33% 9.15% 16.29%

Return on Assets -4.28 -9.50% -5.22% 4.29% 7.33%

Return on Fixed Assets -57.66 -117.41% -59.75% 50.47% 86.67%

Cost Ratios

Operating costs (% of Sales) 2.16 105.21% 103.05% 97.63% 95.46%

Administration costs (% of Sales) N.A. N.A. N.A. N.A. N.A.

Interest costs (% of Sales) N.A. N.A. N.A. N.A. N.A.

Liquidity Ratios

Current Ratio -7.16% 1.41 1.52 2.37 2.18

Cash Ratio 6.53% 0.53 0.50 0.81 0.67

Leverage Ratios

Debt to Equity Ratio N.A. N.A. N.A. N.A. N.A.

Debt to Capital Ratio N.A. N.A. N.A. N.A. N.A.

Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A.

Efficiency Ratios

Fixed Asset Turnover 15.06% 22.54 19.59 21.32 19.10

Asset Turnover 6.58% 1.82 1.71 1.81 1.62

Current Asset Turnover 10.33% 2.27 2.06 2.23 1.95

Working Capital Turnover 29.46% 7.78 6.01 3.87 3.59

Capital Employed Turnover 11.99% 4.31 3.85 3.48 3.42

Improved Decline

Financial Summary

• The company incurred a net loss of INR 73.7 mn in FY 2014, as

compared to net loss of INR 25.7 mn in FY 2013

• The company reported total income of INR 2,484.3 mn in FY

2014, registering an decrease of 1% over FY 2013

• The company earned an operating margin of -5.17% in FY

2014, a decrease of 2.16 percentage points over FY 2013

Net Profit/Loss Total Income

0

50

100

-50

-100

3,000

2,000

1,000

0

2014

-73.7

2,484.3

2013

-25.7

2,513.7

2012

46.2

2,371.6

2011

79.5

2,196.5

INR mn INR mn


24

SAMPLE


Business Highlights

Description News

Overview • XX

Battery Products • XX


25

SAMPLE

• XX • XX

• XX • XX

T O

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lead acid battery market india - marketresearch battery market in india 2014.ppt true deep cycle dry...

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