Panasonic Energy India Company Ltd

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Current Price - INR 275

The foundation of Panasonic Energy India Co. Ltd. formerly Lakhanpal National Ltd. was laid by Late Mr.Konosuke Matsushita and Mr.D.D.Lakhanpal on 15th August 1972 at G.I.D.C., Makarpura Industrial Estate, Vadodara. It was set-up in collaboration with Matsushita Electric Industrial Company Limited, Japan when India’s former Prime Minister Late Mrs.Indira Gandhi had visited Japan. After being highly impressed by the business policy of Late Mr.Matsushita, Late Mrs. Indira Gandhi had decided to take technical & financial assistance to start dry cell battery unit in India. This unit was formed to meet the escalating needs of power and energy in India. First manufacturing plant was started at Vadodara (Gujarat), the production commenced from July, 1973 with Metal Jacketed dry cell battery in UM-1 and UM-2 Hyper grade. Second manufacturing plant of UM-3 Metal Jacketed dry cell battery was started in 1989 at Pithampur, Dist. Dhar (near Indore) M.P. (credits - Panasonic website)

Producers of Zinc Carbon batteries, Alkaline batteries, Eneloop, Torches

It is one of the top three producers of these products and selling under two brands- NOVINO (Novino Raja and Novino Hyper) and Panasonic. PEIL has two manufacturing facilities in India - Vadodara & Pithampur. 4 regional offices and 16 depots across the country.

Mr. M. Morikawa (Chairman & Managing Director) - Industrial Engineer from Waseda University, Tokyo with Panasonic since 1986
Mr. G. N. Punj (Independent Director) - ‘A’ level Oxford and Cambridge Board and Law Graduate from London School of Economics and Political Science, U.K; Also heads Lloyd Insulations India Ltd., India’s leading Energy Efficiency Company
Ms. Geeta Goradia (Independent Director) - former First Lady president of Federation of Gujarat Industries
Mr.Mayur Swadia (Independent Director) - Chartered Accountant
Mr. Atul Dalmia (Independent Director) - Chemical Engineer, BITS Pilani
Mr. C. Kidani (Nominee Director of Foreign Collaborator) - Science graduate - Hiroshima University

Company sells rechargeable batteries under the brand Eneloop - successful product in its category. Also launched India’s highest performing “Panasonic Ultimate” dry cell battery with longest shelf life of 36 months. Company sourcing part of its raw material requirements from overseas - They call themselves Japan’s no.1 brand and an environmentally friendly battery. In 2010 - they established themselves as the only battery company in India, manufacturing 100% eco friendly (Cd and Hg free) batteries

Stock PE - 24. EPS for year ended Mar 2016 - Company is virtually debt free. Company has good consistent profit growth of 26.53% over 5 years. ROCE for last 5 years 15.69%

It has delivered a poor sales growth of 6.57% over past five years. Return on Equity for last 5 years - 12.28%. 1 investor complaint received in last quarter and disposed off. No investor complaint pending from last quarter. Dividend yield - 2.54%

Its peers are Indo National (PE-19), Eveready(23), High Energy Batteries (NA) and Amara Raja.(30)

Disclosure - I have a very small holding in this company since May 2017, interested in increasing my holding
I am looking for direction from seniors on parameters which i have not highlighted/looked at

More importantly, looking for guidance from somebody who has technical knowledge of this sector and can speak about the future prospects of the company’s products
future trends in dry battery and the technical development/R&D happening

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Key risk areas -

  1. Advent of new player with completely new technology
    With increased focus on long lasting batteries across sectors, this sector is also prone to entry of a completely new player
    The barriers to entry are low and especially with chances of spillover from Industrial sector
  2. Chances of change in consumption pattern - usage of rechargeable self contained batteries in toys, appliances alike mobile phones
  3. Increase in raw material prices with the metal prices firming up
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Are they planning to produce Lithium-ion batteries in India. This may help the company positively for possible large scale introduction of EVs in India.

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Excerpt from their Annual Report reads as below

Industry Structure and Development

Organized battery industry has experienced sharp fall in its sales and revenue in the FY 2016-17. It was also affected by change in the buying preferences of the consumer especially, “D Size” batteries. However, the Company foresees positive impacts of demonetization, introduction of GST and slow but steady shift towards Alkalization of Indian market. The Company also witnessed growing trend of other categories of cylindrical / coin batteries like lithium batteries.

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Hi Amey,

Thanks for sharing extract of AR. I went thru various AR to check management’s view on future outlook pertaining to lithium ion batteries but could not find much.

The change in management and acquisition of stake of Indian Promoters by Panasonic Corporation in last couple of years is a sign that there is some planning going at Corporate level.

Let’s see.

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While doing research got the following article:

This article is of 2014 where Panasonic and Uno Minda have joined hands to produce Starting, Lighting & Ignition (SLI) and lithium ion battery.

If that is the case then my question is will Panasonic Energy produce lithium ion batteries under PEICL?

Comments?

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I had sent an email to the company secretary about 3 weeks ago (17th Oct) which still remains unanswered

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No commentary/reply from company on my questions and this led me to sell all my holdings at 284 on 15th Nov 2017
starting the same day the scrip rallies approx 35% and is now quoting at INR 348/-

I take this a learning (patience) however I am not convinced at why it went up

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Panasonic India and Panasonic Energy India are independent entities in my view. Therefore, it will not fall under the domain of Panasonic Energy India.

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Panasonic batteries ropes in PV Sindhu as its brand ambassador

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PV Sindhu in Panasonic Batteries latest ad campaign

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When we type panasonic in youtube we ger a video about panasonic in collabration with tesla is working on evs batteries.if this is the same company then sky is limit for this stock

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Hi Sohan,

While the holding company is same for both of them, the US entity and Indian entity are different.

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In 2014, Warren Buffet purchased Duracell Batteries at valuation of 4.2 Billion USD,ie.INR 27,500 crores (5 years before). Seeing that valuation, Panasonic Batteries India at 250 crores m/cap seems very reasonable.

Panasonic Energy India Co. Ltd. is among top battery manufacturer in India, Debt-free, High Dividend paying, Professionally Managed company.

Restrictions on Cheap Chinese Imports, can be key trigger for this stock.

Disc. Invested

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Going through latest AR. Refer page 64.

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Chapter V of MSMED Act says

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Further Section 22 states that

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Hence after going thru last 5 years Ar observed that this is the first time company has made such kind of a disclosure. My query is

  1. Being such an ethical company (that it projects), isn’t it paying MSME vendors on time?

  2. Could these costs be avoided in the past? In fact why did such costs come into picture.

  3. can these be avoided in future?

Would request fellow investors/brothers to inquire from the company.

Disc. Not invested but tracking.

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I used to track this company a while back,but there is no concrete steps on the ground for an expansion.I had read its annual reports cover to cover there is nothing dubious atleast according to me.What is your rationale for this company.

Coming to your points i dont think they are that material to the company as they are lower than one crore.

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does this company plan to enter the EV battery space any time in future ? panasonic in usa is aggressively importing Li-Ion batteries

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The company spent 11.77 cr in 11.12 cr in FY20 & 11.77 Cr in FY 19 against net profit of 7 cr & 2 cr (after subtracting 3 cr from each year net profit, which is post tax other income). In every annual report they talk about cheap imports from China and battery consumption migration towards AAA battery (if I am not wrong) even in India, where company has good footing. Only problem is it does not turn up in numbers.

Let us see, if Govt clamp down on cheap imports brings some revival to this company.

Disc: Invested @350 for Tracking

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