Market Research Report : Lead acid battery market in india 2014 - Sample

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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

3

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

2018e 7

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

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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

22

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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