CALCUTTA, February 19: Furukawa of Japan has agreed to transfer the technological agreement it had with Standard Batteries Ltd (SBL) to Exide Industries Ltd. Exide chairman and managing director SB Ganguly told reporters here on Thursday that Exide had entered into an agreement with Furukawa Batteries "so that the Standard-Furukawa brand will continue to be available to customers."Exide took over the manufacturing units of Standard Batteries at Taloja, Kanjur Marg, Ahmedanagar and Guindy in November last for a total consideration of Rs 100 crore. The takeover was based on acquisition of all fixed assets and brands, raw materials, work in progress and finished goods and transfer of services of all categories of employees. Furukawa had an agreement with Standard Batteries for its Taloja plant. After the acquisition, Furukawa has now agreed to continue to help the unit to upgrade its product to global standards.
Ganguly said they would be retaining the Standard-Furukawa brand name. With the acquisition ofStandard Batteries, the current dealership strength of Exide stands at around 2,500 throughout the country. Its dealer network has also been transferred to Exide The current fiscal having been a bad year insofar as the automotive sector is concerned, Ganguly said the company's growth would be restricted to around 18 to 20 per cent in 1997-98. "But things will not remain the same in the next year ... we hope ... and then we will realise our target of Rs 1,000 crore turnover by the turn of the century."
Exide will introduce a number of new brands in collaboration with Furukawa. Ganguly said the new collaboration would not in any way impinge on the existing technical tie-up that the battery major has with Shin Kobe of Japan.
At present, Exide has a capacity of 2.7 million units. Post-acquisition, its capacity will stand at 3.3 million units. Its new plant at Hosur in Tamil Nadu, which is coming up, will add an additional one million units, taking the total to 4.3 million units. Ganguly said to be globallycompetitive, the minimum production capacity should be five million units. For bridging the gap, expansions would be undertaken at the newly acquired units, he added.
The market share of the company will be 90 per cent in the original equipment manufacturers (OEM) segment. In the replacement market, the company's share will remain at 30 per cent, the rest of it being in the hands of the unorganised segment.
Meanwhile, the company has decided to put the proposed factory at Haryana on the backburner. "We have decided to defer the new facility to 1999," said Ganguly. Exide has already acquired land there and Ganguly said that for the moment it would be used to set up a service station for dealing with customer complaints and other services.
Ganguly said that they were holding discussions with Hyundai and Toyota for bulk supplies of batteries. It is already a major supplier to Mercedes, Opel Astra and Cielo.
Reacting to the avowed intentions of Exide Corporation of the US of unleashing its brands in thecountry, Ganguly said that Exide Industries, which is not related to the US company, was preparing itself for the competition. He said Exide Corporation would not be able to market its products under the "Exide" brand name, as his company is the licensed holder of this name in the country, its neighbouring countries and Singapore. If it marketed its products under any other name, the Exide brand is too deeply eimpact, he said.
Exide is also planning to capture the replacement market for storage batteries, according to its marketing chief S Chand. The manufacturers in the unorganised sector, which commands a huge share of 70 per cent, will be given incentives to operate as sub-dealers of Exide. "They will be offered the same incentives as our regular dealers," Chand said.
With its low cost of production and lower prices, the unorganised sector meets the bulk of the replacement demand for storage batteries. However, the batteries are of poor quality, requiring a high degree of maintenance, while theproduction units are a hazard to the environment, according to Chand.
So far the company has not encountered any resistance from the small manufacturers. "We are proceeding very cautiously on this so that we do not upset them." But, he said, protests in certain segments could not be ruled out. He said that most of the manufacturers had shown willingness to accept the scheme as it offered them security as well as the backing of a large well-established corporate house.
While this plan has a countrywide focus, for the tractors segment the company is concentrating on the northern region. Already, said Chand, there has been a growth in distribution network by 40 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
