KOLKATA: Battery major Eveready Industries India Ltd. (EIIL) is planning to import an entire battery plant from South Korea for setting up its second plant at Uttarakhand. Its first unit there is set to go on stream this April adding 400 million pieces to its existing annual capacity of 1.3 billion.

Company sources said that the Korean unit would become operational by June 2008. Import of a 150 million capacity line from Malaysia is also planned.

With these capacity additions, Eveready will move up a notch from its present position of the world's third largest dry cell battery-maker.

With the new capacities, the company plans to go aggressively for the overseas markets. African countries are among the target markets.

Sources said that the battery unit would be imported from a Seoul-based conglomerate, which wants to exit the carbon-zinc battery business. The plant is ten-years old and its technology, automation and robotic control are ahead of Eveready's existing ones.

These ventures come at a time when the company is bracing itself for its first-ever loss on account of its battery business. Eveready Industries, which closed the third quarter with a loss, will see its fourth quarter bottomline denting in the same manner resulting in a marginal overall loss for the company.

This is primarily on account of the huge rise in the price of zinc, a key input. The company imports 50 per cent of its zinc requirement. Unable to absorb the increase, EIIL was forced to pass it on to consumers with its batteries in the `D' segment witnessing a 45 per cent increase in prices over a 15-month period.

"Since this product is used mostly in rural areas (radios and flashlights), there was a slowdown and also deferment of purchases leading to an eight per cent `de-growth' in battery consumption.

"The D segment battery accounts for 50 per cent of the battery business'', sources said.

While the topline, which stood at Rs. 850 crore in 2005-06, will show some growth (due to increased prices) despite the drop in sales volume, the bottomline is set to sag.

But the 2007-08 outlook is expected to be better, since zinc prices have levelled out at $3,200 a tonne against $4,800 and consumption seems to be picking up as buyers adjust to the higher price levels in a growing economy.

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