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The implementation of GST has opened wide opportunities for Exide Industries, according to the country’s largest automotive battery maker.
Exide’s product prices have come down 1.7 per cent on an average since the July 1 rollout of GST. The price reduction, however, comes on the back of a near 7 per cent hike in battery prices in the October-December quarter in 2016.
Exide has also launched a mass brand ‘Dynex’, priced approximately 15 per cent lower than the mother brand. It is targeted at small businesses and other segments in the replacement market that prefer low-cost offerings over branded products.
According to Gautam Chatterjee, MD and CEO of the company, organised players are expected to benefit the most from the new tax regime. “With GST coming in, the unorganised players are expected to find it difficult to avoid compliances. Automatically, then, the cost difference between organised and unorganised sectors will come down and many from the unorganised sector will move out. Hence, organised players will find more breathing space,” he told reporters on the sidelines of the company’s 70th AGM.
The unorganised sector occupies nearly 35 per cent of the replacement market — or 7 million battery pieces out of the 20 million sold annually.
Chatterjee expects Dynex to cater to the segment that would look to shift to branded offerings due to a smaller price difference. Exide envisages a ₹1,100-crore capex this year including that of the Haldia unit, and another ₹100 crore towards setting up of a smelter unit there.
It is also exploring tie-ups to make lithium-ion batteries for electric vehicles. As of now the Hero Group has evinced some interest. Exide will also look at “improved offerings” in the e-rickshaw ( also called Totos) category.
Profit down 3.5%Exide, meanwhile, reported an over 3.5 per cent decline in net profit to ₹189 crore for the first quarter ended June 2017, against ₹196 crore in the previous-year period.
The dip in profit came despite the company reporting a near 5 per cent jump in turnover to ₹2,390 crore (₹2,280 crore).
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