Exide Q1FY12 Results: Demand slumps and lead prices rise

One of the major battery manufacturer in the country, Exide Industries, reported its quarterly results for the period ending June 30, 2011 (Q1FY2012). Its net profit for Q1FY2011 was Rs 165 crore and this fell down to Rs 163 crore for the period of Q1FY2012. However, net turnover during the April-June quarter grew by 8% to Rs 1,244 crore.

Officials attribute the Q1 performance to slower growth for the automotive vehicle segment and lower demand for inverter batteries.

T.V. Ramanathan Exide Industries managing director & CEO said :"The demand growth seen in the country's automotive industry over the last several quarters did not continue, resulting in lower OE demand. The prevalent power supply situation and pleasant weather conditions in the north Indian markets also resulted in lower inverter battery sales during the quarter."

Explaining the reasons for fall in sales, the CEO said that demand in key high volume segments were subdued, but during the same period lead prices remained high, this resulted in a drop of 300 basis points in the operating margins. Moreover, demand contraction reduced the company's ability to pass on the cost of lead in full. Combining all of these factors, these factors dampened sales and profitability.

But Ramanathan feels that these are short term setbacks.

The company continues with its planned investments aimed at augmenting capacities in all its plants across the country to benefit when the economy regains the robust growth.

Capacity enhancement in the new Ahmednagar plant is going ahead as per schedule and capital expenditure of Rs 370 crore budgeted for this financial year. Various brand building and related marketing initiatives have been undertaken since June 2011 and the favorable impact of these initiatives is expected to get reflected by Q3 of this year.

OneIndia Money