India can emerge as a battery manufacturing destination

Manufacturing in China is becoming expensive due to currency appreciation and increased labour costs. In India, the lead acid battery market is witnessing rising demand from various sectors, thereby providing immense opportunities for manufacturers to grow

By Srabani Sen

Saturday, December 28, 2013: The battery market in India is worth more than Rs 250 billion, and has been growing by 20 per cent annually for the last few years. In 2012, the market for sealed lead acid batteries was worth around Rs 220 billion. Of this market, the automotive segment accounted for 60 per cent (Rs 132 billion), UPS systems and inverters for 20 per cent (Rs 44 billion), telecom 15 per cent (Rs 33 billion) and other segments, including solar power, e-bikes, bio-gas and wind power 5 per cent (Rs 11 billion). However, the overall organised battery market is estimated to be approximately Rs 120 billion only.

Although a large unorganised battery market exists and the organised market is dominated by only a handful of players, there are a lot of opportunities for new players to capture a significant share of the battery market, as the market for lead acid batteries is expected to witness strong growth in the next five years.

This demand will also get a boost since the import of lead and lead products from countries such as China is becoming difficult, following the imposition of duties on them. As long as lead products could be easily imported, the market was in the hands of the unorganised sector. Now, with imports becoming expensive, the market will see a surge in the demand for India-made batteries.

“The lead-acid battery market in India is witnessing rising demand from various sectors, thereby providing immense opportunities to manufacturers to grow, and dealers and distributors to operate in a lucrative market,” says Rajesh Gupta, director, Okaya Power Ltd. Adds Yogesh Dua, director, upsINVERTER.com (UTL), “With the steady increase in the production and sale of vehicles as well as the electrification in rural India, there is a continuous increase in demand for lead-acid batteries. It is the best time for the existing and new manufacturers of lead-acid batteries to increase their market share and enchash the opportunity created by appreciation in dollar price.”

Demand for lead-acid batteries

According to Sunil Bhatnagar, director, marketing, Artheon Electronics, a huge demand for batteries is coming from sectors like electric vehicles, telecom and solar power. “In the electric vehicle segment, while the demand is growing for four-wheelers, the two-wheeler segment has slowed down due to the withdrawal of incentives from the government, though the requirements for battery replacements in old electric vehicles is still good,” he says.

“Indian manufacturers are getting ready for higher demand for batteries. The demand would increase at a very fast pace as China is now not very competitive in battery pricing. The strengthening of the dollar has made things worse for Indian battery importers, hence giving the battery manufacturers more opportunities to grow,” he adds.

Demand from the solar segment is getting stronger, as very high targets have been set under the Jawaharlal Nehru National Solar Mission. The growing demand for solar lanterns (CFL and LED-based) is driving the demand for batteries in this segment. “The solar segment largely uses tubular batteries, except for solar-based LED and CFL lighting systems that use small VRLA batteries like 6V, 4.5Ah and 12V, 7Ah. Indian manufacturers are addressing these markets adequately,” says Biju Bruno, managing director, Greenvision Technologies.

The telecom segment has come out of a period of sluggish growth after two-three years and is expected to see good demand this year. Demand for batteries will also shoot up as Central and state governments are coming up with new regulations, which mandate that 10 per cent of the power used by telecom tower companies must be generated through renewable energy sources. This holds true for even hospitals, hotels, etc. This would lead to a major increase in battery demand, as all this generated power would have to be stored in batteries.

The need for uninterrupted power in various industries such as telecom, banking and hospitality has resulted in the strong growth for industrial batteries. Says Biju Bruno, “With the rising need for power back-up, the UPS segment is driving the huge demand for batteries. This segment has given rise to demand for valve-regulated lead-acid (VRLA) and tubular batteries.

The replacement market for batteries, which is mostly served by smaller companies, is also growing considerably. Demand for such batteries comes mostly from semi-urban and rural areas.

Says Madan Kotnala, COO, Su-Kam Power Systems Ltd, “The demand for lead acid batteries has grown so much that manufacturers in India have not been able to meet the demand. Hence, a large number of batteries are still being imported from China to fill this gap. With the opening up of new avenues like solar and e-bikes, the demand will further increase. There are immense opportunities in the automotive segment as the number of vehicles per person is still very low in comparison to other developing countries. Substantial demand for batteries will come from solar off-grid projects as well.”

“The high efficiency with which lead-acid batteries can be recycled has resulted in several recyclers entering the battery business. Since it is easier to make a recycled lead-acid battery than manufacturing a new one, most players find it more convenient to enter the battery recycling business,” says Rajesh Gupta.

Potential for battery manufacturing

Although there are only a few big manufacturers of batteries in India, particularly of the SMF VRLA variety, there is immense scope for new players to enter this space. While the domestic market for batteries is expected to grow significantly, a lot of exports would also take place due to environmental concerns in other countries. India is now exporting batteries to countries like UK, USA and several countries in the African continent.

Talking about the manufacturing ecosystem, Sunil Bhatnagar shares, “India is very conducive to battery manufacture as the country has environmental systems and procedures in place, and the manufacturers are focusing on effluent treatment plant (ETP) equipment.”

Says Hiren Pravin Shah, general manager, industrial device division, Panasonic India, “We have seen the emergence of many new VRLA battery manufacturers in the last five years. Even the existing manufacturers are further expanding their capacities. India has the best manufacturing environment due to the huge local demand. SMF VRLA batteries need to be charged and stored under recommended conditions, and it’s a challenge to geographically transport the batteries across India. So it makes sense to not only produce these batteries locally but also have multiple warehousing/charging stations.”

Adds Biju Bruno, “There is good scope for India to emerge as a VRLA battery manufacturing destination, as manufacturing in China is becoming expensive due to currency appreciation and increased labour costs. Most of the raw materials are available indigenously and, hence, the dollar appreciation would be beneficial to manufacturers looking to export.”

According to Vikas Aggarwal, director, Computech Systems, there is vast scope for more players to start manufacturing in India. But VRLA battery is a cost-intensive product. Companies need to invest heavily in technology transfer besides on hi-tech machines and training manpower. However, some new companies are compromising on quality.”

Says Rajesh Gupta, “With new players entering the sector, the battery industry will also evolve faster as companies will invest in better technologies that are cost-effective and more eco-friendly. Consumers will also get better options and, most importantly, the battery sector will get more organised.”

SMF VRLA batteries rule the market

A few technologies rule the battery market, of which the sealed maintenance-free (SMF) VRLA is the most popular. “SMF VRLA batteries are convenient to use and transport compared to conventional flooded batteries. For UPS applications, it is the dominant battery type. In small solar LED lighting systems, lithium-ion batteries are replacing SMF VRLA, but their numbers at the moment are not large due to their high cost,” informs Biju Bruno.

“SMF VRLA batteries are ideal if one is looking for the ‘fit and forget’ type of battery. They are extremely good for solar lanterns, telecom, IT and ITES, as well as security and automation applications. The technology is proven and is ideal for a host of applications. New technologies like fuel cells and ultra-capacitors are also emerging, but these have their own limitations and are yet to prove themselves,” says Sunil Bhatnagar.

Hiren Pravin Shah informs, “Currently, SMF VRLA batteries are being used in all major storage and backup applications like automotive, UPS and inverters. That’s because it’s a proven technology in terms of field performance, quality, reliability and cost-to-performance ratio (the best output power or capacity for the cost). The total cost-of-ownership (TCO) of VRLA batteries makes them the more preferred solution compared to DG sets and other options, as ROI recovery is fastest from VRLA batteries. The only limitation is that the harsh conditions in India reduce the life of these batteries.”

Within the VRLA category, there are several technologies, and performance depends on many factors like the design and construction of the battery, the materials used for the positive and negative plates, the grid and mesh, the process and manufacturing technology, and the valves.

With improved battery technology, the life of batteries is also increasing. Informs Yogesh Dua, “In lead-acid batteries, the manufacturing process plays the most important role—the amount and quality of acid used is a significant factor in increasing the life of the battery. Automotive batteries provide sustainable current even after discharging up to 70 per cent.”

Shares Hiren Pravin Shah, “Panasonic is focusing on longer-life batteries (especially for Indian conditions), special designs for batteries to be used for solar/windmill applications, and electric vehicle batteries for specific customers. We are looking at extending the average life of batteries from three/three-and-a-half years to five years or more.”

“With regard to lead acid batteries, manufacturers are working on variants using gel that will operate better in solar and UPS applications where high temperatures and deep cycling are involved. We ourselves are working on flat-plate gel batteries that will be ready for the market by February next year,” shares Biju Bruno.

“Since new applications of VRLA batteries are emerging, the deep cycle technology has improved the cycle life and reliability of batteries,” says Vikas Aggarwal.

According to Rajesh Gupta, for longer life of its batteries, Okaya Batteries use corrosion resistant alloys for spine and grid casting. The pressure die casting for void-free and fine grain structures also enhances battery life. For improved efficiency, special chemicals are used as additives in active materials for fast charge acceptance. Separators and gauntlets with lower electrical resistance and high purity of raw materials play a significant role in enhancing efficiency.

For energy efficient solutions Su-Kam-Trojan battery lasts longer due to Trojan’s alpha plus paste, which is a propriety, high density paste engineered to deliver outstanding battery performance. Su-Kam-Trojan INV-150, which the company claims uses the least lead and sulphuric acid, serves 800 cycles at 80 per cent DOD.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine