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Faced with lower demand from automobile manufacturers, Exide Industries Ltd is now pinning its hopes on cost-cutting to improve margins.
The country’s largest lead-acid battery maker reported a mere three per cent growth in net profit to Rs 146 crore during January-March 2013 against the previous year quarter. Much of the profit growth was contributed by 5.5 per cent price increase in February.
“We have taken some steps for value engineering of products. We are hopeful to do better in the following quarters,” newly appointed Managing Director and CEO, P.K. Kataky, told Business Line . Value engineering is a method to cut costs without compromising the product’s quality.
Fall in OE demand
Expressing concern about the gloomy industrial outlook and the policy stalemate in Delhi, Kataky said that OE (original equipment) demand from automobile sector continued to be low in the current quarter.
“There is a negative growth in OE demand. However, our replacement sales are increasing,” he said. Automobile batteries contribute nearly 60 per cent of the company’s annual business. Exide blamed “de-growth in the OE business in the four-wheeler segment and less than expected growth in the two-wheeler” for the poor run in January-March 2013 quarter.
Focus on India
On possibilities to tap the neighbouring Asean (Association for South East Asian Nations) market, Kataky said the company was exporting batteries in the region through its Singapore-based outfit Chloride Batteries S E Asia Pte Ltd (CBSEA). However, there is no plan to step up activities in overseas market due to poor margins.
Asean is a trade block comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
“We are exporting some batteries in the region. However, there is no plan to step up export activity as prices are better in the Indian market,” he said.
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