Research-Linked Expansion

Research-Linked Expansion Hansavivek CHLORIDE INDIA took on hand in late 1978 a major expansion programme at Haldia involving a total investment of about Rs 15 crores. This included a 100 per cent export factory, an industrial battery manufacturing unit for the domestic market and a unit for manufacture of battery separators and containers. The battery separator plant, wholly designed by the company and fabricated in India, was commissioned in July 1980 and is saving significant foreign exchange, Export prospects for special use are also bright. The 100 per cent export factory, which is expected to go on stream in early 1981, was conceived primarily to cope with the growing demand for the company's products in overseas markets. Exports by the company have expanded from Rs 42 lakh in 1969-70 to nearly Rs 6 crore in 1979-80. This growth has been possible due to the company's ability to keep ahead of technology. The industrial battery unit should be on stream by March 1982 to cater to the rising demand for tailor-made batteries, mainly from the public utilities. The management has finalised rupee and foreign exchange term loans aggregating to approximately Rs 1.85 crore with financial institutions and banks to meet a part of the expansion costs. In order to meet the increased requirements of core working capital, the company issued 11 per cent mortgage, debencroro tures of Rs 100 lakh which have been fully subscribed. The research and development centre of the company, in close co-operation with Chloride Group of the UK, is continually engaged in research on appropriate technology to make the best battery to suit the arduous Indian conditions. The centre has on hand ongoing projects for no-maintenance batteries, uninterrupted power systems, special types of defence batteries and solar electric power systems as well as value engineering exercises to reduce costs while improving the life and performance characteristics of the products. During 1979-80, the company achiev ed higher sales and profits but margins were perceptibly eroded. Sales increased from Rs 35.13 crore to Rs 42,76 crore and gross profit looked up to Rs7.34 crore from the previous year's Rs 0.84 crore. This is attributed to considerable loss of production in one of the factories due to industrial unrest, coupled with allround cost push arising from high rate of inflation. The price of the company's principal raw material was pushed up by 80 per cent owing to international speculation. Product prices were increased but, as a result of cost-price time lag, rate of margins has not been maintained. Net profit amounted to Rs 2.53 crore (Rs 2.23 crore) and covered the unchanged total dividend of 23 per cent (of which the final of 15 per cent was payable on the capital enlarged by a one-for-four bonus issue) 1.38 times against 1.47 times previously. The wholly-owned subsidiary, Chloride and Exide Batteries (Eastern), improved its turnover by 61 per cent and profit after tax by about 68 per cent as compared to the previous year. No dividend, however, was paid with a view to conserving funds for working capital requirements. The associate company, Mine Safety Appliances, extended its