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GLOBALISATION Charged Up Having restructured its operations, Exide is now raring to tap global markets. By Debojyoti Chatterjee
Today, his charge, the Rs 1,000-crore Exide Industries, is battling success. It's both the driving force and a drag. For one, the restructuring of past five years has finally replaced the company's linear structure with strategic business units, leading to better product mix. But worryingly, the topline is tapering off. In the third quarter of this fiscal, Exide's sales dipped by about 2 per cent and the net by about 10 per cent. But Ganguly, Chairman and Managing Director of Exide, sees an opportunity in the slide. ''The 3q is the trigger for the next wave of changes in Exide. The move to plot the next growth curve has begun.'' Thinking Global Ganguly has drawn up a busy to-do list. Step one is to take Exide into markets abroad, primarily for industrial batteries. In automotive batteries, he wants to increase penetration in the replacement market and garner a larger share in segments like that of tractors. A not-so-modest Rs 200 crore has been earmarked for investment over the next three years to ramp up product development. ''We are fully aware of the market conditions and have no hesitancy in admitting that it's difficult,'' says Sudhir Chand, Director (Automotive) Exide. ''But we are also aware where the next opportunity is,'' he adds. The SBU structure has helped Exide build two completely different sets of marketing forces. Customer-intensive automotive battery business has honed Exide's servicing skills. For instance, it now has a 24-hour service facility called Bat-Mobile, prompted by its discovery that although battery was high on people's blame list, it was low on their concern list. ''By upgrading our front-end services we have tried to change this perception,'' says Chand. The trouble is that in the last couple of years there has been little or no addition in fresh auto capacity in the country. This means that Exide, which had assumed a virtual monopoly in the OE segment following its acquisition of Standard Furukawa, is facing flattening growth curve. Growing Portfolio
The company is aware of it. It is hoping that for the first set of sedans that were launched in the early-to-mid nineties coming up for battery change (an estimated 1 lakh vehicles), sales will be better over the next few quarters. For the long-term, it is sharpening focus on markets like tractors, where it has a 13 per cent share. By 2004, it plans to grab at least 30 per cent of this market. There's plenty of competition to reckon with, though. Hyderabad-based Amara Raja has entered the auto segment. Which means that Exide's 90 per cent share in the OE segment will inevitably get affected. Says Ramachandra Naidu Galla, Chairman of Amara Raja: ''With Exide right on top of the pile, we have an incentive to grow and plenty of headroom to effect that as well.'' Amara Raja apart, there's South Korean imports to battle. Sure, imported automotive batteries account for just 80 per cent of the total market, but with quantitative restrictions going, their numbers could swell. Ganguly is moving to meet that eventuality. On the one hand, Exide is focusing on cutting supply time by manufacturing out of five locations (Haldia and Shyamnagar in West Bengal; Hosur near Bangalore; Chinchwada near Pune; and Bawal in Haryana). It has also augmented its distribution network and implemented an ERP system to cut inventory pile-up in its supply chain. On the other hand, the battery major is using its 1996 acquisition of Standard Furukawa (and Amco) as a competing brand within its portfolio. ''(Exide and Standard Furukawa) have separate manufacturing and sales set-ups, and they are urged to compete with each other,'' says Chand. The restructuring has lowered Exide's dependence on automotive batteries from 80 per cent to 60 per cent. Industrial batteries, virtually non-existent in the company's portfolio as recent as the early nineties, will rake in a hefty Rs 421 crore by the end of this fiscal. Of that, the contemporary valve-regulated lead acid (VRLA) technology batteries will account for around 50 per cent, says Gautam Chatterjee, Director of Exide's industrial SBU. Its newly-launched inverter batteries business has pulled a coup of sorts by tying up its entire output from the Bangalore plant with American Power Company (APC), a US-based inverter major. Apparently, what clinched the deal for Exide is the fact that, unlike automotive batteries, the industrial variety is labour intensive and, therefore, manufacturing is moving to Asia. Exide already has a plant in Sri Lanka, and is now scouting for more locations in the SAARC region. ''That's why we believe the next spurt in our growth will come from global markets,'' says Ganguly. Fearing that the 'Made in India' tag may not help price realisation in the $2.5-billion global market, Exide has acquired a Singapore-based company, which will warehouse and market its products. Besides, a new brand name ceil (reminiscent of Exide's former parent Chloride Eastern Industries Ltd) is being promoted, since the Exide name cannot be sold in markets like the US and Europe. It's now more than ever that Ganguly will need to keep his calm. |
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There's a
sense of calm about Satya Brata Ganguly, SB to his friends and peers. But
scratch the surface and you find a hard-nosed, commonsense-driven
professional candid enough to admit mistakes, and aggressive enough to
ride out the downswing. And why not? After all, he survived a bitter
change of ownership (S.K. Birla giving way to Rajan Raheja) and even a
much publicised kidnapping.