Battery Industry in Pakistan – A Comparative Study

The Battery industry is totally dependent upon the automobile sector, where the demand for batteries is directly related to the growth and demand of automobiles. Pakistan Auto industry has long been termed a stagnant sector because sales have never picked up beyond a certain level. With just three major players catering to the domestic car market one can see that it is not a very large market either.
The total demand for Automotive Batteries was estimated to be around 1.56 million units during 1997-98. This is expected to increase by 8-9 % during 1998-99 due to the overall improvement in economy.  Of this demand 70% was met by the organized sector and the gap was filled by smuggled and re-plated batteries.
The main players in the Battery Industry are Atlas Battery Limited (AGS), Volta Batteries, FB Batteries and Exide Batteries. The market shares are 50% Exide, 35% AGS, 15% FB.

• Volta Batteries during 1998-99 put up their manufacturing facilities with the significant advantage of sales tax exemptions. Thus, they are able to compete in the industry but are not considered as a major threat to Exide. With no technological back up and insufficient resources, they will find it almost impossible to maintain the competitive edge particularly under the sales tax regime.
•  AGS in the recent past appeared to have moved ahead at a much faster rate than Exide. Never in the last three decades the position of Exide was so seriously threatened as it is today. This is because of various reasons. Firstly, the have technological and operational support from GS Japan, with frequent visits from Japanese engineers to overview their operations. Secondly, their dealers are considered to be the most loyal in the industry. Thirdly, they have increased their installed capacity.
•  FB is a sister concern of Exide Batteries, where Exide took over FB in 1992. In 1998, the link was severed, however the top management is the same but the two companies are operated as separate entities. FB has invested heavily in balancing, modernization and expansion of plant and machinery, over the past years. This is intended to increase production volume, quality and market share. All these factors combined have the potential to threaten Exides’ position as the market leader.

Technological Environment

The Battery Industry is a reflection of obsolete technology. All the players in this sector are using outdated methods and means of production. Moreover, the local culture is not conducive towards research and development. The companies that are associated with Japanese firms have the added advantage of spill over technology effects, with the exception of Exide Batteries that has no foreign association.  FB projects itself  as a company using Japanese technology  in its manufacturing operations, however, this is not the case. The batteries have Japanese signs printed on them to mislead the ignorant customers, however the batteries are locally manufactured with the help of local technology.