The Hindu Business Line : Exide net rises despite higher raw material costs

Kolkata, Jan. 14 Exide Industries, for the third quarter ended December 31, 2007, has registered a 59 per cent growth in net profit at Rs 55 crore, and 60 per cent growth in net turnover at Rs 910 crore, compared with the corresponding quarter of 2006-07, according to a company release issued here today.

The improved results have come despite a record increase in lead prices and negative or little growth in all OE segments except in passenger cars, during the quarter under review.

outlook

According to Exide sources, the bottomline may improve further in the fourth quarter as lead prices have softened to $2,500 a tonne from its record high of $3,750 a tonne (in October 2007) during the last couple of weeks thereby easing the pressure on margins. A bounceback in OE demand from the commercial vehicles segment is likely in the last quarter.

On whether the company would pass on the benefits of reduction in lead prices, a senior company official said that during first nine months of 2007-08 lead prices shot up by 118 per cent against which the company hiked product prices by a mere 27 per cent. Lead constitutes 70 per cent of the raw material cost of lead-acid batteries.

Lead apart, the cost of acid and plastics – two other important components – have gone up substantially in the last few months.

“All put together, there is no case for reduction in battery prices in the foreseeable future. At its best, the softening of lead prices has given us a breathing space,” a senior official told Business Line.

According to him, internationally battery manufacturers recently hiked prices by 2-2.5 per cent. “However, we are not considering any price rise in India,” the official added.

According to the official, robust growth in replacement demand has helped the company to increase overall sales volumes during April-December 2007. Exide recorded a 52 per cent growth in turnover to Rs 2,598 crore (Rs 1,711 crore) and 60 per cent growth in net profit to Rs 187 crore (Rs 117 crore) during the nine-month period.

“While there was buoyancy in the replacement market, the OE offtake was significantly below expectations at the beginning of the year,” the Managing Director and CEO, Mr T.V. Ramanathan, said.

According to sources, the replacement sales increased by 22 per cent.

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