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Lead Acid Battery Market – India December 2014
Executive Summary
Market
Drivers & Challenges
Government Regulation
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:
Challenges:
Growing Automotive Industry Increasing Demand for Power Backup Booming Renewable Energy Sector Recycling Efficiency Lucrative Replacement Market
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
Procedure for registration/renewal of registration of recyclers Responsibilities of recycler Responsibilities of auctioneer Responsibilities of consumer or bulk consumer
Major Public Players
Major Private Players
Company A
Company C
Company E
Company B
Company D
Company F
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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•Macro Economic Indicators •Introduction •Market Overview •EXIM •Drivers & Challenges •Government Regulation •Competitive Landscape •Strategic Recommendations •Appendix LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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Macroeconomic Indicators (1/3) GDP at Factor Cost: Quarterly INR tr 16 15
d1
14
c1 b1 a1
13
c4 b4 a4
c3 b3 a3
c2 b2 a2
12
Q1
Q2 2011-12
2012-13
Q3 2013-14
Q4 2014-15
Inflation Rate: Monthly % 2 1
p
r
s
q
0 -1
t
-2
Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
Oct 2013 - Nov 2013
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
Nov 2013 - Dec 2013
4
Modern lead-acid batteries are made up of four basic components
SAMPLE
Lead-Acid Battery Components
Factor 1
Factor 3
Factor 2
Factor 4
• XX
• XX
• XX
• XX
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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True deep cycle dry cell lead-acid batteries come in three main construction types
SAMPLE
Types of Dry Cell Batteries
Type 1 • XX • XX • XX • XX
Type 2 • XX • XX • XX • XX
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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Lead-acid battery market in India is progressing at a steady rate due to growing demand across sectors
SAMPLE
Market Overview – Lead-Acid Batteries • 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
Market Size and Growth (Value – Wise) INR bn
C B
x1
x4
x3
x2
A 0 2014
2015e
2016e
2017e
2018e
Market Segmentation (Value – Wise) A
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
x5
X
D
x
B
x
Unorganized players dominate the lower end of the replacement market (commercial vehicles and tractors) due to the price sensitive nature of the segment
y
y
2014 LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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Industrial batteries are exhibiting a higher growth rate than automotive batteries
SAMPLE
Market Overview – Automotive Batteries • 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
Market Overview – Industrial Batteries • 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
Automotive Batteries (Value – Wise) INR bn D
x5
X
D C
x1
x2
x3
x4
B A 0 2014
2015e
2016e
2017e
2018e
Industrial Batteries (Value – Wise) INR bn
D Y
C B
y1
y2
y5 y4
y3
A 0
2014
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
2015e
2016e
2017e
2018e
8
Lead Acid Battery – Import Lead Acid Battery Import (850710) Volume
INR mn y1
C
Value
Major Importing Nations – Value Wise
‘000 Kg
C
B A
x1
x3
x2
2012
2013
B
y4
2014
Volume
D
y1
B A
x1
x2
x3
Others
Major Importing Nations – Value Wise
C y4
B
x4
A
0
JAPAN
x2
2014
D y3
C
x3
‘000 Kg
y2
x5
x7
x8
CHINA P RP VIETNAM SOC REP
x3
MALAYSIA x1 x2
2013
2014
2015 (Apr-Aug)
SRI LANKA DSR GERMANY Others
0 2012
CHINA P RP THAILAND
2015 (Apr-Aug)
Value
x1
GERMANY
0
Lead Acid Battery Import (85072000) INR mn
BANGLADESH PR
x5 x4
A
x4
0
x6
D
y3
y2
SAMPLE
2014
Note: HS Code - 850710 (Lead acid accumulators of a kind used for starting piston engines); HS Code - 85072000 (Other lead-acid accumulators)
READY TO EAT MARKET IN INDIA 2014.PPT
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Battery market will profit considerably as various sectors where…
SAMPLE
Increasing Demand for Power Backup (2/3) Demand from Telecom Towers
Demand from Hospitals
• 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
• 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
Rise in Telecom Towers ‘000 Nos.
INR tn
X
400 300
Private Hospital Market
x2
x3
x4
x1
4
200 100
2
0
0 2009
2011
2013
2014
y7
Y
6 y1
2012
y2
y3
2013e 2014e
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
y4
2015e
y5
y6
2016e 2017e 2018e 10
Constant development of new and more efficient types of batteries challenge lead-acid batteries
SAMPLE
Threat from Other Types of Batteries
Impact
• 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 Gravimetric Energy Density (KW/KG) Nominal Voltage (V)
Lead-Acid
NickelCadmium
Nickel-Metal Hydride
Lithium-Ion
a-b
c-d
e-f
g–h
x1
x2
x3
x4
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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Volatile nature of lead prices has adverse effects on manufacturing costs, thereby affecting growth
SAMPLE
Volatility in Lead Prices
Impact
• 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
Lead Prices
INR/Metric Ton
140,000 120,000
x5
x1
100,000
x7
x2
x8 x9
x10
Jan-12
Jul-12
x11
x12
Jan-13
Jul-13
x13
x14
Jan-14
Jul-14
x6
x4
80,000 x3
60,000 40,000 20,000 0 Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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Batteries (Management and Handling) Rules, 2001 is the law governing lead-acid batteries in India
SAMPLE
Batteries (Management and Handling) Rules, 2001 is the law governing battery regulation in India and it is limited to only lead-acid batteries
Batteries (Management and Handling) Rules, 2001 • 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
Compliance of the rules • 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
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Market Competition – Porter’s Five Forces Analysis Threat of New Entrants
Impact X
• XX
Impact X
Bargaining Power of Suppliers
Competitive Rivalry
Impact X
Impact X
Bargaining Power of Buyers
• XX • XX
• XX
Threat of Substitutes
Impact X
• XX
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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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 LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Competitive Benchmarking (2/5)
Key Ratios of Top 3 Companies – Operational Basis (FY 2013) (1/x) Operating Margin
%
Net Margin
Gross Margin
40 x3
30 20
x1
10
x2
z3
y3 y1
y2
z1 z2
0 Company A
Company B
Company C
• XX • XX • XX • XX • XX
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Company A (1/4) Company Information Corporate Address
XX
Tel No.
XX
Fax No.
XX
Website
XX
Year of Incorporation
XX
Ticker Symbol
XX
Stock Exchange
XX
Offices and Centres – India
Hyderabad
Head Office
Products and Services Category
Products/Services
Electrical Components
XX
Key People Name
Designation
XX
XX
XX
XX
XX
XX
XX
XX
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Company A (2/4) Financial Snapshot Total Income
INR bn 40 30 20 10 0
1.48 17.66 2011
2.15 23.85 2012
Key Ratios Net Profit/Loss INR bn 3.67 4 2.87 3 2 34.76 30.02 1 0 2013
2014
Financial Summary
Particulars
y-o-y change (2014-13)
2014
2013
2012
2011
0.97
14.86%
13.89%
12.76%
12.60%
1.02
10.57%
9.55%
9.02%
8.39%
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
1.39
15.44%
14.05%
13.36%
12.48%
-0.09
26.96%
27.05%
26.12%
22.93%
-0.63
34.30%
34.92%
32.42%
29.79%
16.39
77.67%
61.28%
57.78%
61.22%
0.58
24.14%
23.56%
22.51%
19.94%
-23.50
67.57%
91.07%
79.34%
63.54%
-0.93
84.96%
85.90%
87.12%
87.36%
0.47
12.50%
12.04%
13.03%
14.26%
0.01
0.02%
0.01%
0.06%
0.08%
Cost Ratios
• 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
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
-6.05%
2.05
2.18
2.28
1.99
-33.83%
0.49
0.74
0.59
0.17
-24.77%
0.06
0.08
0.10
0.14
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
-23.32%
0.06
0.08
0.09
0.12
-61.19%
770.79
1986.18
225.40
153.47
-30.40%
4.49
6.46
6.16
5.02
-3.89%
1.61
1.67
1.75
1.58
12.40%
2.64
2.35
2.52
2.40
18.89%
5.17
4.34
4.49
4.84
-7.94%
2.37
2.58
2.60
2.39
Efficiency Ratios
Indicators
Value (20/11/2014)
Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute)
45,384.9 42,307.2 21.99 33.30
Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
Improved
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
Decline
18
SAMPLE
Public: Domestic Company – Company A (3/4) Key Business Segments
Key Geographic Segments*
Lead Acid Storage Batteries
India
100% 50%
100% 100%
0%
Lead Acid Storage Batteries is the only business segment from where the company has earned revenue for last four years
2014
50%
100%
India is the only geographic segment in which the company has been operating for the last five years
0% 2012
Business Highlights Description
News
Overview
• XX
Collaborations
• XX
Expansion Plans
• XX
Note: Due to lack of critical data, geographical segments graph could not be generated
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Company A (4/4)
• XX
• XX
• XX
S
W
O
T • XX
20
SAMPLE
Private: Domestic Company – Company B (1/5) Company Information
Corporate Address
XX
Tel No.
XX
Fax No.
XX
Website
XX
Offices and Centres – India
Jalandhar Chandigarh Dehradun Gurgaon Delhi Lucknow Jaipur Ghaziabad Patna Guwahati Ranchi Indore Ahmedabad Cuttack Mumbai Pune Secunderabad
Products and Services Category
Products/Services
Batteries
XX
UPS
XX
Bangalore Thrissur Chennai
Head Office Branch Office
Key People Name
Designation
XX
XX
XX
XX
XX
XX
XX
XX
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Company B (2/5) Shareholders of the Company Name
Ownership Structure 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
Corporate bodies
100.00%
Note: Details of shareholders as on AGM dated 26th Aug, 2014 LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Company B (3/5) Financial Snapshot Total Income
Key Ratios Net Profit/Loss
Particulars
INR mn
INR mn
3,000 46.2
-25.7
-73.7
50
2,000 1,000
100
2,196.5
2,371.6
2,513.7
2,484.3
0 -50
79.5 0
-100 2011
2012
2013
2014
Financial Summary
2014
2013
2012
2011
-2.16
-5.17%
-3.02%
2.35%
4.50%
-1.94
-2.97%
-1.02%
1.95%
3.62%
-2.55
-4.48%
-1.93%
3.08%
5.37%
-8.89
-12.87%
-3.98%
6.84%
12.48%
-10.72
-22.45%
-11.74%
8.25%
15.51%
-22.21
-40.54%
-18.33%
9.15%
16.29%
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
-4.28
-9.50%
-5.22%
4.29%
7.33%
-57.66
-117.41%
-59.75%
50.47%
86.67%
2.16
105.21%
103.05% 97.63%
95.46%
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
-7.16%
1.41
1.52
2.37
2.18
6.53%
0.53
0.50
0.81
0.67
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
15.06%
22.54
19.59
21.32
19.10
6.58%
1.82
1.71
1.81
1.62
10.33%
2.27
2.06
2.23
1.95
29.46%
7.78
6.01
3.87
3.59
11.99%
4.31
3.85
3.48
3.42
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
• 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
Liquidity Ratios
• The company reported total income of INR 2,484.3 mn in FY 2014, registering an decrease of 1% over FY 2013
Leverage Ratios
• The company earned an operating margin of -5.17% in FY 2014, a decrease of 2.16 percentage points over FY 2013
y-o-y change (2014-13)
Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
Improved
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
Decline
23
SAMPLE
Private: Domestic Company – Company B (4/5) Business Highlights Description
News
Overview
• XX
Battery Products
• XX
LEAD-ACID BATTERY MARKET IN INDIA 2014.PPT
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SAMPLE
Private: Domestic Company – Company B (5/5)
• XX
• XX
• XX
S
W
O
T • XX
25
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