ppt eveready 23 aug
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EVEREADY EVEREADY INDUSTRIES LIMITEDINDUSTRIES LIMITED
Performance Study: An Economic Perspective
GROUP BAbhishek Raj (08EP-001)
Amit Manchanda (08EP-006)Ravi Purwat (08EP-046)Pallavi Sen (08EP-038)
Siddhartha Madra (08EP-053)Tanvir Zaheer (08EP-059)
ObjectiveObjective
To understand the various To understand the various economic factors affecting economic factors affecting profitability of profitability of Eveready Eveready Industries Ltd.Industries Ltd.
To suggest measures for To suggest measures for economic viability.economic viability.
Company ProfileCompany Profile formerly known as formerly known as Union Carbide India, Union Carbide India,
LimitedLimited is the flagship company of the B.M. is the flagship company of the B.M. Khaitan Group. Khaitan Group.
Established in 1905.Established in 1905. Manufacture and market of batteries, flashlight Manufacture and market of batteries, flashlight
cases, electrolytic manganese dioxide and arc cases, electrolytic manganese dioxide and arc carbons. carbons.
Also manufactures photo-engravers plates/strips Also manufactures photo-engravers plates/strips for printing, castings, hard facing and tube rods, for printing, castings, hard facing and tube rods, carbon electrodes and other related products. carbon electrodes and other related products.
Produces and markets tea (tez) and mosquito Produces and markets tea (tez) and mosquito coils (Poweron). coils (Poweron).
Business SegmentsBusiness Segments
revenue from segments
5138
9 11
batteries
tea
flashlight cases
electrolytic manganesedioxide
purchased products
Battery Industry BasicsBattery Industry Basics
Battery
Primary (non rechargeable)DRY CELL
Secondary (Rechargeable)
UMI (D Segment, large sized) UM2 (middle sized AA)
UM3 (small AAA)
Major Players Major Players EVEREADYEVEREADY INDO NATIONAL – NIPPOINDO NATIONAL – NIPPO MATUSHITA LAKHANPAL – MATUSHITA LAKHANPAL –
NOVINO PANASONICNOVINO PANASONIC GILLETTE- DURACELLGILLETTE- DURACELL SHERAVANI INDUSTRIAL SHERAVANI INDUSTRIAL
SYNDICATE- GEEPSYNDICATE- GEEP
Dry Cell Battery : Market Dry Cell Battery : Market shareshare
Dry Cell Battery : The UM1 segmentDry Cell Battery : The UM1 segment
• Basic demand of UMI the large sized from rural
areas
• With electrification retard in growth of UMI
batteries
• Growth of cheaper led batteries in this demand
category
• Weightage of UM1 declined from 87% in 1996-97
to 59% presently However potential huge that
cannot be ignored in Indian market
Dry Cell Battery Dry Cell Battery UM2 Segment almost non existentUM2 Segment almost non existent UM3/AAA batteries demand grown UM3/AAA batteries demand grown
from 4% in 1996-97 to 38% nowfrom 4% in 1996-97 to 38% now Attributed to growth of remote Attributed to growth of remote
control device, quartz wall clock and control device, quartz wall clock and other such low drain equipmentother such low drain equipment
Cost EscalationCost Escalation Zinc is the primary raw materialZinc is the primary raw material Prices of zinc have increased substantially in the Prices of zinc have increased substantially in the
last 3 yearslast 3 years Zinc consumption in Indian increased in last few Zinc consumption in Indian increased in last few
yearsyears Prices of zinc determined by London stock metal Prices of zinc determined by London stock metal
exchangeexchange Raw material costs account 50% of the salesRaw material costs account 50% of the sales Zinc accounts for 335 of input costsZinc accounts for 335 of input costs International zinc prices raised from about $1,010 a International zinc prices raised from about $1,010 a
tone in 1998-99 to $tone in 1998-99 to $27842784 in 2007-08 in 2007-08
Zinc Price MovementZinc Price Movement
Source: London Metal Exchange
With growth in demand for high energy drainproducts alkaline batteries will be the futureIndia is in a transition stage of battery consumptionAlkaline batteries account for only 2% of battery market shareWhile 90% in developed countriesHowever price premium is high
With growth in demand for high energy drainproducts alkaline batteries will be the futureIndia is in a transition stage of battery consumptionAlkaline batteries account for only 2% of battery market shareWhile 90% in developed countriesHowever price premium is high
Alkaline BatteriesAlkaline Batteries
Alkaline BatteriesAlkaline Batteries
growth in demand for high energy drain products
alkaline batteries will be the future India is in a transition stage of battery
consumption Alkaline batteries account for only 2%
of battery market share While 90% in developed countries However price premium is high
Future: Alkaline Future: Alkaline BatteriesBatteries
With growth in demand for high energy drain
India is in a transition stage of battery consumption
Alkaline batteries account for only 2% of battery market share
While 90% in developed countries However price premium is high
Research Gaps Contd--Research Gaps Contd-- Consumption and manufacturing of alkaline Consumption and manufacturing of alkaline
batteries not well documentedbatteries not well documented No industry association issues documentationNo industry association issues documentation Neither the company website nor the various Neither the company website nor the various
data sources illustrate decline in salesdata sources illustrate decline in sales It is from the company website and news It is from the company website and news
reports the decline in sales in batteries has reports the decline in sales in batteries has been brought out.been brought out.
As company’s income and expenses has been As company’s income and expenses has been clubbed from various product categories the clubbed from various product categories the battery analysis is difficult to dobattery analysis is difficult to do
Research GapsResearch Gaps
Main data source Main data source CMIECMIE Company websiteCompany website New ReportsNew Reports Financial analysis websiteFinancial analysis website
Decline in Profits: an Economic PerspectiveDecline in Profits: an Economic Perspective
Increase in the Total Variable Cost & Increase in the Total Variable Cost & Decline in Total RevenueDecline in Total Revenue
The Total variable cost of the company has The Total variable cost of the company has increased leading to fall in total revenues increased leading to fall in total revenues due to rise in cost of inputs i.e. zincdue to rise in cost of inputs i.e. zinc
Decline in Demand with rise in prices of Decline in Demand with rise in prices of batteriesbatteries
As the cost of inputs increased company As the cost of inputs increased company went for a price increase which led to fall went for a price increase which led to fall in demand of UM1 batte%ries.in demand of UM1 batte%ries.
Demand of the product is price sensitiveDemand of the product is price sensitive
Data AnalysisData AnalysisNet ProfitNet Profit
Net Profi t
-0.38
46.31
79.66
-13.43-19.32
-40
-20
0
20
40
60
80
100
2004-03 2004-05 2005-06 2006-07 2007-08
YR
Net Profi t
Operating ExpensesOperating ExpensesTotal Expenses
828.31
574.03
644.11
727.58
784.9
0
100
200
300
400
500
600
700
800
900
2004 2005 2006 2007 2008
yr
Total Expenses
Input Costs EscalationInput Costs Escalationcost of raw materials-EVEREADY BATTERIES
253.09
258.49
255.53
285.1
303.13
335.21
461.82
429.22
453.91
0 50 100 150 200 250 300 350 400 450 500
raw material
r s in cr
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
Dec-00
Problem AreaProblem Area
The revenue of the company is The revenue of the company is inversely proportional to the cost of inversely proportional to the cost of inputs. However these factors are inputs. However these factors are external to the company and beyond external to the company and beyond its control. The company however its control. The company however needs to take measures to improve needs to take measures to improve its profitability. For the last two its profitability. For the last two years the company has been running years the company has been running in losses.in losses.
The Road Ahead: The Road Ahead: SuggestionsSuggestions
Steps to capitalize on growth of alkaline Steps to capitalize on growth of alkaline batteries and set up latest manufacturing batteries and set up latest manufacturing facility for it. facility for it.
Good real estate valuations can be Good real estate valuations can be unlocked. unlocked.
manufacturing units should be set up in manufacturing units should be set up in new tax free zones like Uttaranchalnew tax free zones like Uttaranchal
The company can also diversify into The company can also diversify into other battery segments catering to other battery segments catering to automobiles UPS, CFLs, lighting automobiles UPS, CFLs, lighting equipment and other electrical energy equipment and other electrical energy products.products.
Thank You
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