The Japanese SLI battery maker Hitachi Chemical Company Ltd, has pulled off a deal to take 10% of the Indian SLI market in the next three years— thanks to a free-trade agreement with Thailand.
Hitachi, which launched its commercial vehicle batteries range for the Indian market through a strategic tie-up with Ahmedabad-based Alf technologies, will have a projected turnover of US$231m (Rs 250 crore).
Jackie Chuah, director of the $5.5 billion Hitachi Chemical Asia Pacific Pte Ltd, Singapore said that the Indian market is huge for Hitachi to cover alone. “We thus entered into a strategic partnership with Ahmedabad-based Alf Technologies who have considerable experience about automotive batteries marketing and distribution pan-India,” he said.
Alf Technologies already sells lead-acid batteries under the brand name of Akiyo in India, and would now be selling Hitachi’s range which would be initially targeted at the replacement segment. At present, the size of the replacement market in India is around 18 million units for automotive batteries, and about 30 million for two-wheeler batteries. The industry grew by 9-10% year on year in 2015-16.
Chuah said that the plan is to garner a 10% market share in the replacement category within the next three to five years At present Exide and Amara Raja (Amaron) together account for nearly 85% of the Indian automotive batteries space.
The batteries that would cater to the Indian market would be manufactured at Hitachi’s Thailand plant, which at present has an installed capacity of 1.4 million units per year. Hitachi plans to expand the plant’s capacity to 1.9 million units per year by 2018. About 45-50% of the production is for original equipment manufacturers(OEMs), and the plant supplies to leading companies like Nissan, Mitsubishi and Toyota.
The Thailand facility already supplies to around 20 countries including India, Myanmar, Malaysia and countries in West Asia, and Chuah said that it is operating at 100% capacity
As for setting up a dedicated plant for India, Chuah said that there were no plans as of now. Parth Jain, director of Alf Technologies said that as India has a free trade agreement with Thailand importing the batteries is cost effective. “At present duties work out to be around 22-25%, and we are able to be cost competitive in the Indian market,” Jain said. While there is some import of Chinese batteries for the replacement market, Jain claimed that high duties for battery imports from China act as a protection.
Going forward, Hitachi and Alf together plan to capture the OEMs market as well. This would open up a market size of 10 million automotive batteries, Jain said.
Hitachi and Alf had launched its brand of car batteries in India in end of 2015, and today they launched the commercial vehicles range as well as an expanded range of car batteries. Alf has been test marketing the commercial vehicle batteries range in India since the last six months. Chuah explained that Hitachi Chemicals emerged as a leading player in automotive batteries when it acquired Shin Kobe Group, Japan in 2013. It launched its products in South Asia in the same year and forayed into India in 2015.
Hitachi Chemicals also has a batteries plant in Japan from where it supplies 18 OEMs.