Sources close to the company said the launch of the eco-friendly product is in line with Eveready's strategy of increasing the volume of batteries this year apart from leveraging on 25 per cent growth in the penlite battery segment. However, modalities of the proposed launch are yet to be finalised.

According to a source, last year's general recession had caused a decline in Eveready's sale of batteries. Volumes mean a lot in a low-margin industry, he said. Moreover, the need for innovations has prompted the company to introduce the environment-friendly AA batteries (pencil batteries) in line with international standards.

Industry sources said these batteries are expected to be free of mercury and cadmium. Although batteries with cadmium and mercury are not much in use in Europe, the high temperature conditions in Indiamake it impossible to do away with these toxic elements.

The Indian market generates maximum demand for carbon-zinc batteries and the more recent cost-effective zinc-chloride `super heavy duty' batteries (the black batteries) used in high drainage equipment like tape recorders, toys and cameras. The most preferred are the alkaline batteries which are also more expensive.

In a bid to promote its brand image in a market clustered with various players, Eveready has roped in international brand strategist Shombit Sen Gupta. This will enable the company to capture a major chunk of a volume-driven dry-cell market where brand loyalty is not very strong. It will also provide a sharper focus to its products, a company source said.

Eveready's main competitors include recent entrants like Duracell and BPL apart from established brands like Nippo of Indo National and Novino of Lakhanpal National.

The company recently underwent a brand evaluation exercise conducted by consultancy major Ernst & Young. Itsobjective was to make a financial assessment of brand value in terms of major parameters like financial forecasting, brand earnings, brand risk discount and brand strength. It would also make future investment decisions easier, a company source said.

Eveready posted a 22.6 per cent drop in net profit to Rs 34.85 crore in 1998-99 from Rs 45.03 crore in 1997-98 on account of a high interest burden and lower volume of sales. The interest burden increased by Rs 7 crore to Rs 44.62 crore.

Sales turnover increased by four per cent to Rs 795.39 crore in 1998-99 from Rs 759.77 crore in 1997-98. Volumes dropped as rural sector sales declined.

The Rs 760-crore battery major is also a major producer of both bulk and packet teas. With a huge production base of almost 24 million kg across 25 gardens in Assam and West Bengal, the company has recently undertaken an exercise aimed at nationwide promotion of its packet tea `Tez'.