Eveready Industries Recharges Its Batteries

Updated: May 24 2003, 05:30am hrs
Its come a long way, virtually rising from the ashes. From a multinational brand in the Indian marketplace to an Indian company seeking to charge up the world markets, Eveready has come a long way. Launched in India by Union Carbide, Eveready, with its famous cat with nine lives logo, had become a household word for zinc-carbon batteries powering everything from flashlights to transistor radios. Then came the Bhopal gas tragedy in 1984, which practically shut out the lights for Union Carbide as a company. In stepped the tea baron BM Khaitan, who bought the Eveready dry cells business.

Now, after having been an also-ran for years, Eveready Industries India Ltd, which owns the brand in India, is now looking for dominance in global markets with its zinc carbon batteries, albeit under another name, Lava.

Roshan Joseph
Evereadys crisis in 1984 notwithstanding, the 98 year-old battery major today has an estimated 43 per cent marketshare in India. After the Kolkata-based Khaitans acquired Eveready from Union Carbide in the later half of 1995, things have changed and the company now claims that a new mindset has gradually sunk in, which has made an unprecedented impact on the employees morale. Eveready no longer wishes to remain merely as a battery maker in India. About five years back, the company had a vision of being a global supplier for batteries and since then, Eveready claims that it has taken some significant steps in testing waters overseas.

While some of the efforts have paid off, like tapping foreign markets for exports, yet there were others where the company learnt that diversifying into the manufacturing of new items may not be an easy run, like in the manufacturing of lithium ion batteries for cellphones.

Aniruddha Roy
The effort to venture into newer territories, however, prompted the company to notice two positive indicators: one, that it can make world class quality in carbon zinc batteries matching reputed international players stride for stride in the markets where it exports. On the other, with perhaps the only exception of Chinese battery prices, Eveready says that its manufacturing costs are among the lowest in the world.

Global Push
During 2002-03, it touched a record high of selling 1.2 billion battery units and the focus for the future is clearly to enter new markets where zinc carbon batteries still find acceptance and become an efficient global supplier of these batteries to the world. Eveready now exports its zinc carbon batteries to USA, Mexico, Venezuela Ethiopia, Sudan, Mexico and Bangladesh.

Yet, Eveready operates in a product category that is shrinking the world over, namely making zinc carbon batteries. If you say the market is not growing anymore, then that is a fact worldwide. Alkaline and rechargeable batteries are growing and for rechargeables, it is the value of sale that matters and not the units since they are expensive. One interesting trend is that whenever there is a recession, the market moves towards zinc carbon batteries. In those times the alkaline batteries simply disappear from the market. Alkaline batteries are excellent for heavy drainage equipment but zinc carbon probably suits 80 per cent of ones equipment. In India, 95 per cent of the equipment will be run well by zinc carbon batteries which is a very good value-for-money technology. In India, the zinc carbon batteries are also very well priced and, therefore, the sale of alkaline batteries are declining but that is not so internationally where the prices of zinc carbon and alkaline batteries are very close. Therefore if this has worked out for us in India, we are sure it has to work in certain similar markets in Africa and South America. In fact, in some of these countries, there is actually a growth in D-size batteries but that market in India is shrinking, explains Eveready Industries India Ltd director Mr Roshan Joseph.

RIDING HIGH

Tapping global markets with zinc carbon batteries
Competing with the Chinese with lowest manufacturing cost
Concentrating on alternate product categories whose demand increases during a slowdown
Riding on distribution network and rural penetration
New product initiatives with batteries for cordless phones, rechargeable batteries with chargers bundled with it

The influx of cheap Chinese batteries too did not create a dent for the company as many analysts had anticipated. The company feels that if the cheap Chinese varieties were good in quality there would have been a surge in demand for them in the market by now. I think that the people have become disenchanted with these batteries and also their prices in the wholesale market have not gone up due to their limited availability. Well, they do find acceptance with toy sellers who load these Chinese batteries but not the replacement market consumers..., Mr Joseph says.

Market Moves
Eveready says that its force has always been with its distribution, especially its strength in rural penetration. While it was perceived as a force to reckon with in the villages, it was gradually losing its urban thrust. To address the problem, Eveready devised a cities-specific Give me Red advertising campaign in 1992 which almost worked but was soon discontinued. Rural India is our heritage that we have acquired after years of merchandising there at a local level. We have a 1000-odd vans selling everything from packet tea to flashlights moving 25 days in a month in far-flung villages. Then there are also the melas that we organise for the masses. Therefore, a campaign targeting the rural population was always due and Full-full masala was devised about two years back, Mr Joseph says. The company has now adopted a dual advertising policy re-launching Give Me Red for the urban areas while Full-full Masalas target audience remains with the rural population.

About three years back Eveready appointed data research firm Renoa Consultants which said that if the company regularly covered the outlets where it has a good presence then its marketshare could shoot up to anywhere between 60 and 100 per cent. The agency also pointed out that if the outlets are irregularly covered then the marketshare could come down to around 30 per cent and if not visited at all it could come down to the level of 15 per cent. It only confirmed what we believed in. In fact, the genesis of us going into rural is that India had always been a poor per capita consumption market and wholesellers would only take those products that have a demand in the market. Batteries and flashlights hardly reached these far-flung places and the basic pioneering work to reach these places was carried out by us in the last 98 years, says Mr Joseph.

Change Initiatives
Eveready had also explored making new products like cellphone batteries but has backed off since all the cellphone handsets manufacturers are located abroad. Moreover, there are a multitude of models and each one of these manufacturers has a particular configuration for batteries. If we had to make the batteries then we had to churn out huge quantities to make profits and to operate as an OEM supplier to these companies wouldnt have been possible as all of them are based outside India, says Mr Joseph.

Although, making the cellphone batteries did not work out for the company, some new vistas had opened up. The company made a foray into rechargeable batteries and developed a charger that is bundled with the batteries. It is also manufacturing batteries for cordless phones and has recently launched an alkaline batteries. The company is currently test marketing the products in select markets.

So far as managing its 3,316-strong workforce is concerned, Eveready has taken significant steps towards change management. While the actual stress on quality management began in 1992 with the introduction of Total Quality Management (TQM) along the lines suggested by the Japanese Union of Scientists and Engineers (JUSE). The initiative was sparked off by Mr BM Khaitan himself. Since then we have worked steadily towards reducing the cost of manufacturing and today, barring the Chinese, we are among the cheapest manufacturers in the world, says Mr Aniruddha Roy, Evereadys director.

Another initiative was the setting up of seven modules of Basic Training Programmes which is an 8-hour awareness and attitude building programme addressed by the local manager. Today, from practically nothing a few years back, an average Eveready employee is made to undergo a 30 hours classroom training a year. The company has so far implemented about 50 quality circles Our plants used to work with about 50 per cent efficiency level and the integrated battery and flashlights manufacturing plants are performing at over 90 per cent level in Noida, Hyderabad and Chennai. The current defect level is about 3.3 pieces per thousand, says Mr Roy.