'We need a level playing field for local battery industry'
About seven decades into operation, Rahimafrooz is now being taken over by the third generation of owners. The Business Standard recently talked to Faraaz A Rahim, the young executive director of Rahimafrooz Storage Power Business. Faraaz shared with us his insights about the local battery industry
Having lost both of his parents at a very early age, Abdur Rahim was deprived of formal schooling and the usual comfort of childhood. He grew up to become a hardworking and self-made man. He became involved in various businesses, and in 1954, his first company formally came into being.
Today, Rahimafrooz and Co, established by Abdur Rahim, has developed into a group of companies that are best known for exporting batteries to around 70 countries, mostly under its own brand name.
Although it is the batteries that brought Rahimafrooz into prominence, the group now has eight companies, a few other business ventures, and a not-for-profit social enterprise. The group/parent company currently has more than three thousand five hundred employees, with a further fifty thousand people involved with it indirectly as suppliers, contractors, dealers and retailers.
About seven decades into operation, Rahimafrooz is now being taken over by the third generation of owners. The Business Standard recently talked to Faraaz A Rahim, the young executive director of Rahimafrooz Storage Power Business. Faraaz shared with us his insights about the local battery industry.
TBS: What is the overall scenario of our battery industry? While we are exporting batteries to dozens of countries, are we also capable of meeting domestic demand?
FAR: The battery market was small in the past, and it was dominated by automotive batteries, IPS and partly by solar home systems, etc. Local manufacturers are strong in this segment. We also manufacture and provide batteries for telecommunication, railway, forklift, golf carts, etc. Apart from lithium batteries, only a small number of lead-based batteries are imported, and the rest is produced at home.
The current market size is worth about $800 million to $1 billion. Over time, the market dynamics have shifted completely, with 60 to 70 percent of the demand for batteries being attributed to easy bikes and electric rickshaws. This segment has seen a massive boom. Demand for other batteries has gone up too, but we have seen exponential growth in the EV battery market. But this boom is led by the Chinese-owned factories located in Bangladesh.
TBS: Why is that? Why cannot our local manufacturers take over?
FAR: Some Chinese owners bypass all the environmental certifications and other compliance requirements to set up small factories that mushroom here and there. They also evade VAT. The Accumulator Battery Manufacturers and Exporters Association of Bangladesh invited those owners to join the association and operate within the legal framework. But using local cohorts, they manage to operate in another way.
These entities began with imported Chinese batteries, then they moved to imported plates, and eventually, they started manufacturing the whole thing.
Being pressured by local battery manufacturers, the Department of Environment (DoE) and other agencies sometimes run drives against the illegal manufacturers, but they always spring back under another name, in another place.
About 70 percent of the EV batteries are produced by these Chinese-owned companies in the country. Local manufacturers, though capable of producing such batteries, are unable to capture the market because of the comparative advantage Chinese illegal factories enjoy from the reduced production costs of having no ATPs (Air Treatment Plant) and ETPs (Effluent Treatment Plant), and tax evasion.
We have also heard that instead of lead-calcium many Chinese manufacturers use lead-cadmium in their batteries, which is carcinogenic to those who handle it. But this reduces the production cost further.
However, despite these setbacks, we have been producing EV batteries, although the market remains a niche. So, from the association, we have called upon the government to lower our VAT to zero to five percent so we can have a level playing field against the illegal Chinese manufacturers.
TBS: There are approximately 10 lakh electric three-wheelers in the country. Lightweight lithium batteries are globally preferred for EVs due to their high charge density and longevity. Why are we still using lead-based ones?
FAR: There are two big reasons. The biggest one is the upfront cost for lithium batteries, which is much higher. Secondly, there is a scrap value for a lead-acid battery. On the other hand, recycling lithium batteries is difficult; there are only a limited number of recycling factories worldwide, and we do not have such facilities here in Bangladesh.
There are some other reasons as well. Lithium battery chargers are expensive. Besides, the motors used in the vehicles vary in wattage, which makes it harder to match the battery management system (BMS) with it. Overall, our market has not reached the level of maturity to shift to lithium by overcoming all these challenges.
TBS: Speaking of recycling, recycling lead-acid batteries is also a big environmental concern, is it not?
FAR: Not if you have effective ATP and ETP; and you neutralise the acid properly.
TBS: We have visited two of Rahimafrooz's three battery factories, where we have seen the lead recycling facilities equipped with ATPs and ETPs. But what about the numerous lead smelting factories that have no regard for environmental protection or workers' safety?
FAR: That is truly a big concern. There are only three or four DoE approved recyclers in the country. The rest are unregulated. From the association's side, we have approached the government and proposed to bring battery recycling under organised management. We can collect scrap batteries and recycle them under close government monitoring and regulation. Strong government supervision in this regard is crucial because otherwise, unregulated smelting will mushroom again.
