`We hope imports will not be at cheaper rates' -- Mr Deepak Dheer, Managing Director, Tudor India

B. Krishnakumar

WHILE the storage battery industry has been passing through a rough patch, Tudor India is trying to get a better foothold in the market. After initially venturing into the replacement market, the company is taking steps to make inroads into the original equipment segment. In an interview with Business Line, Mr Deepak Dheer, Managing Director, Tudor India, shared his view on the key issues concerning the industry.

Excerpts from the interview:

In terms of market share, where does Tudor stand in the automobile industry, vis-a-vis its competitors such as Exide, Amco and Amara Raja?

Tudor India has got 10-12 per cent share in the replacement segment. We may be No. 2 in this market, after Exide Industries.

What percentage do the OE and replacement market contribute to the overall turnover of your company? Have you managed to add new clients in the OE segment?

The contribution of the OE market is 15 per cent and the replacement market 85 per cent. We are supplying to Tata Engineering, Mahindra and Mahindra (for jeeps and tractors), International Tractors, Ashok Leyland, Volvo and Tatra. Our batteries have also been approved by Hyundai and Fiat (for their Uno, Sienna and Palio models). Dialogue is on with other major players such as John Deere and Skoda.

What is your company's approach towards the industrial battery segment? Do you plan to produce the battery in India?

We have the capacity to assemble and sell traction cells for industrial use. These cells are used in material handling equipment. We have already launched batteries for motive power segments and bagged orders from the Naval Dockyard, Asian Paints and Larsen and Toubro. Traction cells represents the latest technology in India as no other company in the country offers these cells which are at least 15 per cent more powerful than what Indian manufacturers offer.

What are your other new products?

We assemble special batteries electric vehicles in India which will be supplied to such majors as Reva Cars, Bangalore, and Scooters India, Lucknow. We have signed an order for batteries with Reva Cars and battery blocks with Scooters India and supply will commence from July 2001.

How have the prices of key inputs behaved in the recent past? What has been the overall impact of the depreciation of the rupee?

All the key inputs, including lead and plastics, have become costlier. The depreciation of the rupee has made things worse. This has put the Indian industry at a disadvantage. Batteries are also being imported from

Korea, China, Japan and Bangladesh at extremely low prices. These countries are able to sell cheap because they pay very low Customs duty on inputs. Their power cost is much lower than India. Moreover, their currencies have been devalued more. All this gives them an advantage in the export market.

What is your course of action to be now?

In view of the above factors, the Government must help the industry in bringing down the input cost. The IBMA has requested the Government to lower the Customs duty on lead and separators. So far no decision have been taken by the Government on this.

How have lead prices behaved recently?

Lead prices have been fluctuating. Prices at the London Metal Exchange touched $510 a tonne in the recent past. They are now showing signs of going down, but are expected to go up.

Taking into account the overall firm trends in key inputs, has your company revised product prices in the recent past?

The cheap imports from South-East Asian countries have forced the domestic producers reduce the prices by as much as by 33 per cent since 1998. In addition to this, the product mix has shifted in favour of cheaper products. Therefore, the margin have been seriously eroded. The domestic companies have tried to cut down costs. But they have not been able to do so effectively in view of the high rate of statutory levies (like Customs duty) on the inputs.

What steps has Tudor taken to get a better foothold in the automotive battery segment? What impact has the entry of Amara Raja had on your company?

Tudor has been able to retain market share. However, the profit margins have been eroded. We have been able to maintain market share by stepping up after-sales and service and by improving quality. The entry of Amara Raja has not made any serious impact on our market share.

What are your views on the competitive threat from cheaper imported batteries and the unorganised sector?

The Centre has already initiated anti-dumping action against China, Japan and Korea and we feel that the anti-dumping duty will help improve battery prices in the domestic market. The Government has also initiated Battery Management Rule -- that is, collection of scrap batteries equal to the number sold by the manufacturers/importers which should help the organised sector improve its market share.

What is your company's strategy to combat threat from cheaper imports?

We hope that imports will not be able to come in at a lower price. The Battery Management Rules will make the importers liable for recycling of these batteries which will help only the serious suppliers, and not the traders. To maintain market share, we are expanding our range of batteries, improving the quality and trying to bring the latest technology from our parent company into the country.

What growth rate is expected in the automotive and industrial battery segment in the next three-five years?

The growth rate expected in the automotive segment may be 8 per cent and in the industrial segment 20-25 per cent per annum.