Companies

Exide sees better sales, cost cuts powering margins

Our Bureau Kolkata | Updated on September 15, 2020 Published on September 15, 2020

Gautam Chatterjee

Exide Industries, the country’s largest automotive battery maker, is eyeing EBITDA margins of 15 per cent in the medium run, banking on better sales, cost reduction and R&D improvements, the company’s MD and CEO, Gautam Chatterjee said.

Control on spending, automation and digitisation will be among the other steps it is taking to improve margins. Exide’s EBITDA margins have been between 13 and 14 per cent.

The company, he said, has not lost “any significant” market share to competition either in the OEM space or in the aftermarket category, which includes replacement for old and discharged batteries. Rather, OEMs which had moved to Chinese offerings are coming to Exide, he said.

“Most of our sales are dependent on the aftermarket, which is not shrinking in any way. We have not lost any significant market share in any of the verticals. In the telecom space, rationalisation of mobile towers led to us losing some space. And we are working on getting that back,” Chatterjee said while responding to shareholders’ queries at the company’s 73rd AGM.

“We are targeting EBITDA margins of 15 per cent in the medium run while improving sales. The pandemic has not impacted collections,” he added. The medium term plan also is to take exports to 10 per cent of the turnover, against the current 7 per cent.

Improved demand

According to Chatterjee, post the lockdown and subsequent unlocking, the company is witnessing an upsurge in aftermarket demand, especially for two-wheeler, four-wheeler and home inverter batteries.

The automobile sector – the OEM market – is showing demand too, he added. Low-cost cars and two-wheelers are showing “some improvement in demand” and automakers are hopeful of improvement in sales in the festival season.

Meanwhile, home UPS or inverter segments are expected to grow. Increased work-from-home has only boosted demand. Improved demand in the category is also witnessed in semi-urban and rural areas. Incidentally, demand for inverters is expected to remain high till electricity distribution companies (discoms) emerge stronger.

Consolidation in the lead acid battery segment is also a likely reality with smaller players remaining closed.

Normalcy is also returning to most of Exide's factories. “For instance, we have three facilities in Maharashtra and they are coming back to normal now. Those in West Bengal, Gujarat or Karnataka have returned to normalcy,” Chatterjee said.

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Published on September 15, 2020
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