Restructuring of the battery operations in India follows a review of the Indian alkaline battery market, which has not been doing well and is in line with the company’s plan to reduce costs and improve productivity.
Gillette India has successfully implemented the voluntary retirement scheme (VRS) at the Duracell India plant situated in Manesar, Haryana. However, the alternate use of the capacity is still being worked out by the company.
The company ’s parent, Gillette Company of US, has plans to infuse fresh capital into the Indian venture. The funds would come by way of capital grant to strengthen the financial position of the Indian arm and meet its long term commitments.
The actual use of funds is up to the Indian company to decide, said director legal and corporate affairs (India and south Asia) Vijay Mathur to The Financial Express.
“It was getting tough to export from the Indian plant and worldwide there is a surplus capacity of alkaline batteries. Exporting from India had a number of disadvantages including cost, which resulted in the company deciding to stop manufacturing of alkaline batteries in India,” Mr Mathur, added.
Duracell India plant manufactured only AA size alkaline batteries, while other sizes were being imported. More than 85 per cent of the production was exported from India to countries including the US and Belgium.
After discontinuation of manufacturing of alkaline batteries in India, the company would now source all alkaline batteries from other Duracell facilities worldwide.
The company’s board met in December last year and appointed a review and implementation committee to study an independent report on the company’s non-grooming businesses in India.
The report indicated that growth within the Indian alkaline battery market was below the projected rate. Also improved efficiencies at Duracell plants worldwide, coupled with highly competitive global market conditions, made it no longer cost effective to export from Duracell’s Indian plant.
Maintaining production for Indian market alone was not viable and placed severe financial constraint on the company, Mr. Mathur added.