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Pratim Ranjan Bose

Kolkata , Aug. 5

EXIDE Industries has decided to reduce its exposure in the automobile original equipment (OE) segment and focus on the high-margin replacement market.

Exide controls close to 90 per cent of the domestic automobile OE market. In terms of sales volume, this market constitutes close to 40 per cent of domestic automotive sales.

As OE sales generate a low 2-3 per cent margin compared to 20-25 per cent in replacement sales, the decision is expected to bolster the company's profitability.

The chairman, Mr S.B. Ganguly, has said that profits were expected to increase 30 per cent during the year owing to a drop in lead prices, following a reduction in import duty and high growth in the industrial segment. Industrial batteries contribute 42 per cent of the company's net profit.

According to sources, the company has decided against bidding for fresh volumes in the OE segment except in select cases like the recent deal with Toyota.

Considering the ongoing boom in the automobile sector and the matching growth in Exide's production, replacement sales have just started expanding.

The company will, however, continue supplying to existing buyers in the OE segment, primarily to cushion future volatility in lead prices, as lead is the prime raw material in Exide batteries.

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