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Illegal battery market powers ahead, slack enforcement helps

Illegal battery market powers ahead, slack enforcement helps
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First Published: Sun, Jun 24 2007. 11 51 PM IST
Updated: Sun, Jun 24 2007. 11 51 PM IST
Nimki is an emaciated 12-year-old boy, with blackened blistered hands from 14-hour days as a scrubber. He takes apart old automotive batteries and scrubs clean lead plates in the dingy by-lanes of Mullick Bazaar, the city’s biggest grey market for automotive spares, in the heart of Kolkata.
In a corner of this windowless room, the lead plates are boiled in two open vats, before Nimki and his colleagues get down to their scrubbing, inhaling poisonous lead and consuming some from the dust embedded in their finger-nails.
“What to do? We have to do this to earn our bread,” says Nimki, who uses only one name.
“Oral intake of lead leads to corrosion of the gastro intestinal tract,” says Dr Gaurav Raj, MD (radiodiagnosis) at King George Medical University, Lucknow. “Moreover, heavy metals such as lead have multi-system involvement. Various organs are affected and it stunts the growth of children,” he adds.
Outside the shop Nimki works in, another set of people open the old batteries and tip them over to pour out the sulphuric acid into open drains. The slag from heated lead plates are dumped on open grounds, violating almost every environmental law in the country. In a matter of hours, the lead plates that are scrubbed, find their way to another part of the city where unorganized players purchase the plates and several other parts and cobble together new “local batteries”.
In 2001, the Union ministry of environment and forest (MoEF) had issued a notification to contain this thriving grey market for batteries. The Battery (Management and Handling) Rules, 2000, made it mandatory for manufacturers of batteries to buy back an old battery for every new battery they sell in the replacement market. Ideally, this should have helped stem the flow of old batteries into the grey market, where crude processes of recycling are followed, posing serious health and environmental hazards. But today, after almost seven years of the legislation coming into force, the unorganized sector continues to constitute 40% of the replacement market, particularly for automotive batteries—exactly where it started in 2001.
Battery makers are quick to distance themselves from the mess and a failure to stem the hazardous industry.
“The rules emphasize the responsibility of organized players and have failed to ensure compliance by others,” says Ramana Prasad Alam, vice-president, marketing, Amara Raja Batteries Ltd, which earns 80% of its revenues from the after-market. “Enforcement is a huge issue,” he says.
Echoing the same sentiment, S.B. Ganguly, chairman emeritus, Exide Industries Ltd, who led that company for 13 years until last month, says: “We have been talking to the government for long but it has yielded little result.”
The Rs2,500 crore replacement market for automotive batteries caters to passenger cars and commercial vehicles. The unorganized sector (which is also illegal in this case) lives off commercial vehicle operators, who are extremely price-sensitive, driven by their need to keep the cost of operations to the minimum. Old batteries that are traded for a new one in the grey market get a higher price than they otherwise would.
On an average, a used battery fetches 25-30% more when sold to an unorganized player, than to a branded battery dealer. That’s mostly because the branded dealer would return the battery to an authorized smelter who would recover only the lead—in ingots—making the rest of the parts non-reusable. That’s in sharp contrast to the reconditioned batteries that power scores of vehicles in the country, hidden under the hoods.
“We offer Rs425 for the batteries of Maruti or Santro,” says G. Indeevar, head of automotive after-market at Amara Raja. “On the other hand, the local guy is paying Rs500 or more for the same product,” he adds. A new branded battery for a compact car, for example, would cost Rs2,555, but a ‘local’ one would be about 40% cheaper.
“Most commercial vehicle operators prefer buying ‘local’ batteries as they cost about 40-50% less than a branded battery,” adds K. Rajagopalof Southend Tyres, an authorized dealer for the branded batteries.
Alam is convinced that very few of the old truck batteries make their way back into the organized recycling channel. Buses and taxis are also known to tap this notionally cost-effective segment.
In reality, the unbranded batteries have hidden costs such as shorter life, no guarantee/warranty, cold weather starting problems and greater strain on the dynamo (the battery charger in the engine), facts which escape these buyers. Unorganized players, operating in a non-regulated environment, are able to make a quick buck on these recycled batteries.
Apart from customer attitude pushing used batteries to the thousands of backyard smelters dotting the country, they are also being leaked to this segment by some of the dealers and even some of the authorized smelters seeking a fast buck. “We have been insisting that our dealers help us collect back the old batteries,” says Alam.
It wasn’t clear what the penalty would be for dealers who did not comply.
“The problem is also one of inadequate authorized smelting capacity in the country,” he adds. Only about 25 smelters have been authorized by MoEF, in the whole country.
There are a few more facilities certified by different state pollution control boards. West Bengal has 29 smelters certified by the state authority, says Kallol Neogi, regional manager, Met Trade India Ltd, which has two smelters at Dadri, near Gaziabad and Katwa in Jammu and Kashmir and another one coming up in the Howrah district of West Bengal.
His company’s facilities are all certified by the Central Pollution Control Board and MoEF and deal only with Exide and Amara Raja.
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First Published: Sun, Jun 24 2007. 11 51 PM IST