The Hindu Business Line : Nippo Batteries’ joint venture still open-ended

Last year, the company, which is a joint venture between Indian promoters (Dr Obul Reddy) and Matsushita Electric (the owners of the Panasonic brand), sold 14 lakh torches for Rs 12 crore. It made no profit on the sales. This year, the company intends to sell more torches, but again there may not be any profits in the ‘torch business’.

But that is no cause for worry because, Nippo Batteries’ intention behind selling torches is pushing the sales of what energises them — dry cells.

The ‘dry cell’ industry in India is going through tough times with the rise in input costs. As much as 30 per cent of the costs are of zinc — Zinc prices had softened in the fourth quarter of the year before last but have since risen. Prices of other inputs such as natural manganese di-oxide and electrolytic manganese di-oxide have risen from Rs 15,000 a tonne to Rs 24,000 and from Rs 45,000 a tonne to Rs 55,000, respectively.

The market for dry cells slid last year by 0.68 per cent, but Nippo Batteries managed to raise its sales by 2.93 per cent to Rs 339 crore, against Rs 316 crore in the previous year. The company made a net profit of Rs 16 crore compared with Rs 6 crore in 2006-07.

In April, Daiwa Securities SMBC, a Japanese FII, picked up 9.41 per cent stake in Nippo Batteries, buying the shares from Matsushita Electric.

Before the transaction, the Indian promoters and Matsushita together had 84.4 per cent stake (44.4 per cent with the Indian promoters).

The promoters’ stake needed to be brought down to 75 per cent, as per the company’s listing agreement with the stock exchanges. Matsushita, which has another company in India, (Novino Batteries, in which it has a majority holding,) sold off 9.41 per cent to Daiwa Securities. The question now is whether Matsushita would continue to be a partner of Nippo Batteries or not. The question is still open, though the Indian promoters say that they have received no indication from the Japanese partner to the effect of wanting to exit the company.

Related Stories:
Nippo Batteries Q3 net rises four-fold

More Stories on : Outlook | Strategy | Electrical Goods

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page