A battery business in India is a lucrative venture since batteries are used in various industry verticals and are in constant demand. Big brands like Exide, Luminous, Okaya, and others partner up with small businesses and distribute their products nationwide. Energy storage is booming in India and the battery is an essential item required by businesses to operate efficiently. Batteries can be categorised accordingly as rechargeable and non-rechargeable units. In this article, we will cover the basics such as how to start battery business in India, what documents are needed, how to apply for battery dealership and create a high battery business profit margin in the process.
Did you know?
The replacement battery market for vehicles and UPS is leading the lead-acid battery market in India.
How to Start Battery Business in India?
Before starting a battery business in India, it is important to do market research and learn about your competitors. According to a Grand View Research report, the global battery market will reach ₹31080 crores by 2027. Reuters says that more than 80% of lithium-ion battery production worldwide happens in China, and the European Union is also a major contributor to the battery manufacturing segment. Make sure you are familiar with the different types of battery manufacturing before deciding to invest your time in a niche market.
What your customers are looking for, whether or not the product is in demand, and if your company has the means of producing or distributing in in large volumes - these are all important points to be considered.
Here are the various aspects you need to take care of:
Different states have different legal requirements and you should consider all the licenses, permits, and authorisations needed to operate a battery business in your region before starting. You need to make sure your facilities meet legal and quality regulation standards before you begin production. Besides regulatory requirements, aspects such as what equipment is needed, how much workforce, marketing strategy, and company growth plans are to be considered.
Also Read: An Overview of the Lithium Battery Manufacturers in India
Licences and Registration
You will need a Trade Licence from the municipality and a GST registration number. Business insurance is optional but recommended. Other documents and licenses needed to start the business are:
- Current bank account
- State-government approved shop registration and establishment registration documents
- Business registration (sole proprietorship is adequate)
A local CA or battery dealership agency can help you acquire the necessary documentation. If you seem to lack sufficient funding or capital to launch the business, you can get in touch with a bank or any private financial institution that gives out small business loans. SIDBI is a brand that gives out the best loan offers to battery dealership companies in India.
Plans for a Battery Business
Developing a strong battery business plan will allow companies to sell batteries directly to shops and distribute them. All battery brands work with distributors in different regions throughout the company. If you're operating a multi-brand battery shop, you will find yourself working with various brands. Your business can include local brands in the battery dealership plan and not just international ones.
Branded batteries are preferred by customers since they come with a tag that ascertains their quality and reputation. It's a lot more convenient selling branded batteries since clients trust the products and don't doubt their efficacy.
Used batteries are also in demand and sold at cheaper prices. Keep a few in your store and offer these to customers at reasonable discounts. You can also sell inverter batteries but most customers don't buy them because of trust issues related to their servicing and maintenance.
What Is the Actual Investment Required to Start a Battery Franchise?
The actual investment of your business will depend on the type of brand you're forming a battery distribution partnership with and the products you're stocking up. Below is a rough overview of the costs:
- ₹1 to 2 lacs - which is to be paid as a security deposit for battery distributorship
- Battery recharging machines (about ₹15,000 to ₹25,000)
- ₹25,000 for the shop interior designs and signage
- Miscellaneous business expenses - ₹20,000
- A security deposit for starting your shop (varies from location to location) - ₹50,000
Other ongoing expenses will be involved outside this list, such as labour costs, operating costs, shop rent, equipment maintenance, bills and utilities, and additional costs for adding stock to your inventory.
Profit Margins for Battery Sales
Local brands and smaller businesses will give you higher profit margins as they're new to the market and demand more sales. However, the challenge is getting people to buy from them since clients haven't heard of them. If you're planning to sell inverter batteries, you can make a profit margin of up to 35% from all your sales. Two-wheeler and four-wheeler batteries offer between 20% to 30% battery profits from sales and this is a very good amount.
In the beginning, your brand will struggle to make sales and hit targets. But that is normal. Branded companies have a wider audience reach, but their profit margins are lower. If you don't have to deal with time constraints for growing your business, you can try out that route.
How to Get Exide Battery Dealership
Exide is one of India's best lead-acid storage companies and its headquarters are in Calcutta. The company has a dealership program where it partners with sellers and lets them have a stock of their products to pay a security deposit. The eligibility requirements for joining and getting approved for their dealership program are:
- The applicant has to be over 21 years old and not have any criminal records
- The minimum space should be 100 to 200 square feet for those owning a battery shop. Businesses running their operations as a godown should have 300 to 500 square feet of space for warehousing.
- Must furnish personal ID documents such as proof of address, Aadhar and PAN card,
- A cancelled chequebook page from your current bank account
- Shop agreement, sale deed, and rental agreement
- NOC, GST number, outlet trade license, and other financial documents
Now that you're aware of how to start a battery business in India, you can start working on your company. Partnering with a dealership or distributor is a good business move since it can be difficult to manufacture products from scratch and market them. As your company grows, you can invent your products and introduce new lineups. The type of clients you get is also important and working on your social media marketing strategy can pay off since many companies are choosing to build their digital presence.