The Hindu Business Line : Nippo Batteries Q1 net jumps on changed product mix

Nippo Batteries Company Ltd, which has a 30 per cent share of the Rs 1,100-crore dry-cell market, reported a net profit of Rs 4.21 crore for the April-June quarter against Rs 12 lakh in the corresponding quarter of last year.

Earnings per share increased to Rs 11.23 against Rs 0.32.

This surprised many because Nippo’s principal competitor, Eveready Industries, with 45 per cent market share, reported a net loss of Rs 10 crore for the same period, despite also being in the profitable packet tea industry.

‘No miracle’

“It’s no miracle,” says Mr Obul Reddy, Managing Director, Nippo Batteries. Profits were better because the company raised the prices of its products and changed the product mix in favour of those that consume less of the problem-raw material — zinc.

Consequently, turnover fell a bit (Rs 87.74 crore against Rs 91.22 crore previously), but profits were made.

Zinc usage

The saving in the use of zinc is reflected in the cost of raw materials.

This fell from 65.2 per cent of sales to 62 per cent. Fortunately for the company, the market demand was more for the small batteries that need just 4.5 gm of zinc than for the big ones that need 13 gm.

Nippo Batteries is a joint venture of Indian promoters and Panasonic, which has a 40 per cent stake in the company.

Mr Reddy told Business Line on Monday that the company expects its net profit for the full year to increase to more than three times the achievement of Rs 6.02 crore in 2006-07.