The Hindu Business Line : Exide may outsource batteries from Thailand

IN the wake of the recent India-Thailand free trade agreement (FTA), Exide Industries Ltd (EIL) is planning to outsource batteries from Thailand either from a manufacturer there or by way of setting up its own production base there. Though batteries are not included in the current list of items, the company believes that it will progressively be included in the list of duty free imports in the next two to three years.

Talking to newspersons at the company's production unit in Haldia, the Chairman, Mr S. B. Ganguly, said Exide was exploring opportunities for outsourcing batteries from Siam Furukwa in Thailand.

The Thai company has substantial surplus capacities after meeting domestic demand.

EIL currently sources a part of its requirement from asubsidiary in Sri Lanka.

According to Mr Ganguly, there ishuge cost disparity in manufacturing of batteries between the two nations, owing to high duties imposed by India on imported lead. The duty on lead, which constitutes 70 per cent of the cost of batteries, is as high as 20 per cent in India as against zero in Thailand.

"The current level of import duties is prohibitively high for the domestic industry. While Thailand and China do not charge any duty on lead, neighbouring Bangladesh charges only five per cent," said Mr Ganguly said.

"We are not against the FTA with Thailand; neither are we afraid of competition in terms of quality benchmarks, but unless the Government reduces the import duty to the level of Thailand, there is no case for manufacture of batteries here in a free trade regime."

While expecting early Government response, Exide is exploring possibilities for setting up a lead smelter unit in collaboration with an overseas partner to reduce the impact of volatility in lead prices. "The foreign partner will be the main promoter in the project where Exide may hold a minority stake," Mr Ganguly said, adding that three companies from Russia, Germany and Malaysia have shown interest in investing in the project. The project cost may vary between Rs 60 crore and Rs 120 crore, depending on the size of the unit. He said the company could not pass on the full impact of rise in costs to customers, as there was pressure on prices owing to competition.

Efforts are also on to reduce prices by adopting the total productive maintenance (TPM) system. Already introduced in the company's Hosur unit, the implementation of TPM was kicked off at the Haldia unit on Saturday. "We will implement the system in all our nine plants this year."

Talking on domestic capacities, the Exide Chairman made it clear that "the company ruled out any new facility in India for now and would rather concentrate on consolidation and cost reduction".

Export push: To give a push to its export earnings, Exide will enhance its traction battery capacities from 25,000 cells to 60,000 cells at the Haldia unit this fiscal. The batteries cater to the industrial demand for operation of fork lifts and similar equipment in warehouses and closed factory environments, where the use of other sources of energy is restricted.

"Unlike in India, such batteries witness huge demand in developed countries to avoid pollution on the shop floor," Mr S. B. Ganguly said, adding that several companies including OPK in Germany and CMP in the UK have expressed interest in the company's products.

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