Remake or Buy? Reconditioning Products at Xtra Power Energy Systems

Xtra Power Energy Systems (Xtra Power) was a subsidiary of the Xtra Power Group and had been in business since 2005. Its product portfolio included new and reconditioned lead-acid batteries, sine-wave and digital inverters, solar lanterns, and Uninterruptible Power Supply (UPS) systems. Xtra Power assembled two types of batteries: open shielded and heat shielded. While open shielded batteries could be repaired or reconditioned, heat shielded batteries were disposed of as scrap. Lead acid batteries were in high demand in India due to frequent power cuts, as only they were good at handling extreme temperature conditions such as power cuts for long durations (See Exhibit I for a brief note on the battery industry in India). According to industry observers, the market for batteries in the country was growing at an annual rate of 25% and was expected to keep growing at the same rate till 2015...