With India set to surpass Japan as world’s No. 3 auto market by 2021 and India sales data has seen double-digit growth in 27 states in India and is fourth largest vehicle market behind China, USA and Japan, as per JATO’s partner LMC Automotive. The growing demand for automobile sector, which forms a major consumer base for batteries in India, is experiencing growth in sales over the last five years. This encourages several domestic automobile manufacturers to expand their manufacturing capacities. Industrial end-users of batteries & UPS such as IT, telecom, solar plants, etc., are also anticipated to boost demand for batteries in India in the coming years. 

 

The Indian battery market is experiencing a transformational change and is still at a very nascent stage to adopt Lithium-ion batteries. It will take time to make it more economical. EVs are gearing up due to the much expected rise in electrification initiative by Government of India. Introduction of EV across the nation by all major automobile giants have definitely paved way for a positive approach of EV adoption but it is estimated that by 2025 EVs will be functional on having the entire allied infrastructure which will help it to take it to another level. Lead acid batteries which are widely used across will continue to sustain its market. “Lead acid batteries will shift their applications toward more industrial segment, but it will take time. If government is proactive in making EVs reach more masses with its policies and regulations, we may see fully-functional transport overhaul by 2030, aligning to government’s vision,” says Sanket D More, Founding Partner, Emerging Power Systems and Producers Pvt Ltd.(EPSPPL), Gazhiabad.

 

The future of lead acid batteries will not completely wipe-out, rather it will coexist with the new system. “Contrary to general perceptions, electric cars (EV) have a 12v lead acid battery (LAB) as auxiliary battery for SLI (starter, lighting and ignition) applications. We believe LAB will remain relevant even in the EV world. Given the criticality of the battery and scope of differentiation it offers, we expect OEMs to manufacture EV batteries in-house. Li-ion batteries could be a USD 42 bn opportunity by 2030 (9x the automotive LAB opportunity). Based on this, the cell manufacturing opportunity would be USD 15 bn,” says Jinesh Gandhi, Research Analyst, Motilal Oswal Securities Ltd.

The Indian Automotive Lead Acid Battery market observed growth with a CAGR of more than 10 per cent from 2012-13 to 2017-18. This was propelled by two-wheelers and four- wheelers, coupled with the market share of replacement battery segment of more than 65 per cent. 

 

Recycling

Lead acid batteries are recyclable due to the very nature of lead. Lead can be recycled almost any number of times. There are process losses but this recyclability of Lead has brought environmental and business sustainability to the lead acid battery industry. Lead is generally sourced naturally from an ore called Galena. However, the biggest ore of lead available are various types of lead scraps. Lead acid battery scrap is the primary source of lead scrap. There are other sources of lead scrap as well but any lead recycling plant can be confidently dependent on lead acid battery scrap as its continuous and consistent source of raw material. 

 

Lead acid batteries have a fixed lifespan. On its expiry, the batteries are collected by the dealer who replaces it with a new battery in the vehicle, which enables dealer for discount on the new battery. This way the scrap batteries are sourced and the channelised to various scrap dealers and through them to lead recycling plants. This way the scrap battery finds its way to be recycled. 

 

The scrap batteries get collected in the small battery shops. These shops have limited space and they have heaps of these batteries. In order to drain the acid from the batteries at their respective shops, a closed environment is a must. If the Acid seeps into the ground may mix with the ground water, leading to fatal consequences. “Many in the industry like us have reasonable spaces dedicated to for their dealers, where they can store their sourced scrap. Storing this scrap (used and expired batteries) will solve the dealer’s problem of storage space and even protect environment as dealer shops are located in the public places,” said More.

 

Battery recycling plants are end point of this supply chain. These factories break these batteries and extract lead bearing material which is then fed in to the smelting furnaces. This lead bearing material is a mix of lead and lead oxide. This mixture is smelted in smelting furnaces to produce cure lead. This crude Lead is later refined to a purity of 99.98 per cent. This lead produced will now find its way towards a lead acid battery manufacturing company. The loop is closed here and the cycle begins again. So the need of management of lead acid battery scrap starts at this point. The acid needs to be collected and then responsibly sent to a treatment facility. The lead acid battery scraps along with the plastics should go separately to the lead acid battery recycling plant in India / abroad. 

 

The lead recycling plant manufacturer should ideally have plants which ensure proper management of lead acid battery scrap from the point where the scrap enters the recycling facility. “Lithium Ion batteries fail miserably in the recyclability 

factor. Currently the process is not profitable for Entrepreneurs Individually and also the process is too complex due to the complex chemistry of the Lithium Ion Batteries,“ believes Gandhi.

 

It is estimated that with steady growth of Lithium-ion batteries, huge scrap of other battery forms will be generated which will serve as raw material to many industries. “Lead scraps will increase to a large extent till 2030 as adoption of EV will increase. In addition the ever-growing manufacturing sector also uses these forms of automobile batteries. Scrap generated can be recycled and converted into metals which are used in glass, piping, plastic, ammunitions, paints and others,” points out More.

 

Replacement market 

In FY17, the unorganised segment is estimated to account for 35-40 per cent of the automobile battery replacement market, with over 50 per cent share in CVs and tractor segment. The replacement market is highly fragmented, especially for commercial vehicles and tractors. Unorganised manufacturers are also strong players in cost conscious rural markets. Motilal Oswal report titled—‘Batteries: Huge Opportuinities, but Challenges too states, “Amara Raja Group and Exide have been able to gain substantial market share through (a) launching entry level products, (b) widened distribution network, (c) increased marketing initiatives and (d) improved service levels. Both companies should outperform the industry, with revenue CAGR of 16-17 per cent, driven by market share gains from the unorganised players.”

 

“There is a shift towards organised market, recently added four service set ups which accounted to unorganised market. We are working over developing our own lithium ion batteries. Currently, we are strong with our lead acid, nickel cadmium and nickel metal hydride segment in the regions of North Uttar Pradesh and states like Haryana and West Bengal. We also export 10 per cent of our total production to Nepal.” More adds.

 

Many battery manufacturers from the north Indian states have now shifted their focus to export markets like Bangladesh, Sri Lanka, Nepal and Bhutan. Even if EVs in India grow double these markets will help lead and other battery manufacturers to sustain. More while citing differences in these optional markets says, “Nepal and Bangladesh are of the good markets for battery exports for lead and other battery forms as automobile industry is growing there. Due to wide-scale construction of roads, especially in Nepal will give its automobile segment a push to continue its growth. Bhutan is not that great as automotives are less and even the electrification initiatives in the country have impacted over exports. Though, Bhutan opens up market for EV 2-wheelers batteries.  Sri Lanka too is a good market 

but duties are high which discourages exports”However, More from EPSPPL also believed that for lithium-ion batteries, Sri Lanka will be a good export market as their government is too considering reducing duty for EVs and accessories.

 

E-Rickshaw to drive batteries

With Kerala Automobile Ltd. gearing up for electric batteries with tenders. It has successfully rendered government initiatives like LPG and CNG auto earlier. Its past experience and its market share give it a platform to leverage the future with the government’s support. 

“The e-rickshaw battery market is estimated to grow at a CAGR of 16 per cent over till 2020 to Rs 41 bn. Though Amara Raja Group and Exide have been late entrants in this segment, they are now heavily focused on the fast growing and lucrative segment. The GST-led consolidation of warehouses has boosted demand for forklifts, pallet trucks, stackers, order pickers, and reach trucks among others, in turn driving demand for motive power batteries. Assuming motive power contributes 15 per cent to the industrial segment by 2022 (v/s 1 per cent currently), this segment offers an opportunity of Rs 25bn-30 bn as against less than Rs 2 bn currently,” speculates Gandhi.

 

Digitisation to drive UPS market 

India UPS market is will grow at a CAGR of more than 9 per cent by 2023. Growth in the market can be attributed to increasing demand for power backup across commercial as well as industrial sectors coupled with growing digitalisation across the country. Moreover, rising number of technological advancements coupled with government’s initiatives to improve electrification rate and development of smart cities across the country is further expected to push demand for UPS systems across the country in the coming years. Furthermore, rising demand from tier 2 and tier 3 cities is also expected to steer growth in the country’s UPS market until 2023.

 

There is a rise in automation systems, not only at the industrial level but also at local level like internet service providers (ISP) have increased widely in tier-2 cities. In tier-1 cities, 8% rise in adoption of home automation systems by real estate, which requires 24*7 power backup, observes Emerging Power Systems and Producers Pvt Ltd, a Gaziabad-based manufacturer of Lead Acid batteries and UPS.

More also believes that the backup systems are has a strong market where there are IT hubs and extended Delhi has lots of them, varying in domains like Call Centres, ISPs, Digital media agencies, Tech companies and infotech parks. Apart from these backup systems has a good business in Corporate and Industrial Parks.

 

With Industry 4.0, manufacturing plants have digitised their operations. “On an average 20 % of the manufacturing plant has workflow or automated systems. These systems require power back up,” informs Rajesh Choubey, Director, Imagine Software and Power Systems.

 

Quote

Lithium Ion batteries fail miserably in the recyclability factor. Currently the process is not profitable for Entrepreneurs Individually and also the process is too complex due to the complex chemistry of the Lithium Ion Batteries.

Jinesh Gandhi, Research Analyst, MOSL

 

On an average 20 % of the manufacturing plant has workflow or automated systems. These systems require power back up.

Rajesh Choubey, Director, Imagine Software and Power Systems (ISPS)

 

“Nepal and Bangladesh are of the good markets for battery exports for lead and other battery forms as automobile industry are growing there. Due to wide-scale construction of roads, especially in Nepal will give its automobile segment a push. Bhutan opens up market for EV 2-wheelers batteries.

Sanket D More, Founding Partner, EPSPPL