Exide sees increase in Oct-Dec profit margins

Exide Industries may report marginal improvement in profitability during the October-December 2010 quarter backed primarily by “substantial” improvement in replacement sales of motor-cycle batteries compared with the previous quarters in this fiscal.

Capacity restrictions vis-à-vis the booming demand from OE (original equipment) sector has forced Exide to sacrifice the opportunities in replacement market during the second quarter of 2010-11. Since OE sales yield low margin, the company's profit from operations remained flat when compared with the corresponding period in 2009-10. Exceptional earnings from sale of land, however, helped the battery maker to post 31 per cent growth in profit before tax.

The company has commissioned the third two-wheeler battery manufacturing facility at Ahmednagar in Maharashtra at the beginning of the current quarter which has helped its motor-cycle battery production to go up by nearly 35 per cent to 1.4 million units a month.The added capacity had helped the company to cater the replacement market to its full potential even after meeting the increasing OE (original equipment) requirements.