Exide aims to make up for losing market share by entering inverter business

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Due to sluggish demand in the automotive sector and the volatility of the rupee, the company reported a 6.87 per cent dip in its net profit, earning Rs 1.52 billion for the quarter ended June 30, 2012

By Srabani Sen

Exide Industries, the leading manufacturer of batteries in India, is eyeing the UPS and inverter market to cover for the loss it suffered in the quarter that closed in June 2012. It is making efforts to acquire the inverter business of an Uttar Pradesh based company, BML Technologies. If the deal goes through, this would be the second acquisition of Exide in the inverter space, as earlier this year it had taken over the home inverter business of Kevin Power Solutions. BML Technologies has its inverter and UPS manufacturing facility in Haridwar, Uttarakhand.

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Acquisition of Kevin Power

Earlier, addressing the shareholders at the annual general meeting in Kolkata, company managing director and CEO, TV Ramanathan, said that the company had spent Rs 17 million for the acquisition of Kevin Power Solutions, another UP based manufacturer of power backup systems, batteries and home appliances, with its manufacturing plant for home inverters in Roorkie. “Inverters and UPS systems are the current growth drivers in the industry,” Ramanathan said at the meeting.

Ramanathan had also informed the shareholders that the company has chalked out a capital expenditure plan of Rs 2.7 billion for the current fiscal year to carry out its expansion plans in FY’13.

This is an effort to make up for the company’s loss in market share this year. “We expect to regain our original position in the market soon,” said Ramanathan.

Dip in net profit

Exide Industries has reported a 6.87 per cent dip in net profit at Rs 1.52 billion, for the quarter ended June 30, 2012, due to sluggish demand in the automotive sector and volatility of the rupee. Exide registered a net profit of Rs 1.63 billion last year, and a 6.68 per cent rise in net profit in the previous quarter.

Being a major player in automotive batteries, with a market share of over 70 per cent in the OEM segment, a large part of Exide’s profits were eroded because of the slowdown in demand.

Amara Raja gain

Exide Industries’ loss has been Amara Raja Batteries’ gain. Amara Raja is the country’s second largest battery maker. While Exide’s shares underperformed at the Nifty mid-cap index, Amara Raja’s shares outperformed both the Nifty mid-cap and its competitors. Amara Raja’s valuation revved up to about 10 times of forward earnings compared with the average of six-seven times.

In 2011, Exide had entered into a technical collaboration and assistance agreement with East Penn Manufacturing Co Inc, USA, a leading manufacturer of lead acid batteries and accessory products for the automotive, telecommunications and UPS markets. Exide also has tie-ups with the Japanese firms Standard Furakawa and Shinkobe.

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