Exide to invest Rs 1,800-mn on capacity expansion

Kolkata: Exide Industries will invest Rs 180 crore towards capacity expansion of both automotive and industrial batteries in this fiscal.

The Managing Director and CEO, Mr T.V. Ramanathan, said that capacities of both the industrial and automotive segments would be augmented by 20 per cent each.

On possibilities of price revision, he said that such options would be examined if lead prices go past the $2,500-a-tonne mark.

Lead is the prime raw material of lead-acid batteries manufactured by Exide and is currently ruling around $2,200 a tonne.

Elaborating on its efforts to enhance the margin, Mr Ramanathan said the company aims to save 10 per cent on raw material cost by sourcing 50 per cent of the total lead requirement from own smelters during the next three years.

Exide has acquired two smelters during the last few months to recycle the lead used in batteries. This will reduce the company’s requirement of imported prime lead.

On the revenue front, the company has entered into LME-linked pricing arrangement with the majority of its OE (original equipment) customers, to protect its interests in the face of volatility in the lead prices.

Meanwhile, Exide today declared 17 per cent growth in net profit to Rs 82 crore in the first quarter of 2008-09 compared with the corresponding period of 2007-08. Turnover grew by 34 per cent to Rs 1,135 crore.

“Profit growth was affected by the depreciation of the rupee vis-a-vis all major currencies. A depreciating rupee affects profitability since we import a sizeable part of our main raw material, lead,” Mr Ramanathan said. “In view of the burgeoning inflation rates, we have to keep a very tight leash on costs over the next three quarters of this fiscal,” he added.

Exide incurred a net exchange loss of Rs 8.7 crore on raw material and, interest and finance costs during the quarter. This is against a net exchange gain of Rs 11.55 crore during the corresponding period last year.

The industrial battery business, particularly in the telecom and power sectors, continued to show robust growth during the first quarter.

Half of Tata Nano, scheduled to be launched in late 2008, will run on Exide batteries.