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Exide Industries Ltd.

BSE: 500086 Sector: Auto
NSE: EXIDEIND ISIN Code: INE302A01020
BSE LIVE 15:45 | 14 Dec 204.25 -0.30
(-0.15%)
OPEN

204.15

HIGH

205.95

LOW

203.50

NSE 15:59 | 14 Dec 204.15 -0.40
(-0.20%)
OPEN

205.00

HIGH

206.00

LOW

203.65

OPEN 204.15
PREVIOUS CLOSE 204.55
VOLUME 106060
52-Week high 249.70
52-Week low 170.40
P/E 25.99
Mkt Cap.(Rs cr) 17,361
Buy Price 204.25
Buy Qty 5.00
Sell Price 0.00
Sell Qty 0.00
OPEN 204.15
CLOSE 204.55
VOLUME 106060
52-Week high 249.70
52-Week low 170.40
P/E 25.99
Mkt Cap.(Rs cr) 17,361
Buy Price 204.25
Buy Qty 5.00
Sell Price 0.00
Sell Qty 0.00

Exide Industries Ltd. (EXIDEIND) - Chairman Speech

Company chairman speech

ANNUAL REPORT 2000-2001 EXIDE INDUSTRIES LIMITED CHAIRMAN'S SPEECH Lades & Gentlemen At the outset let me welcome you to the fifty fourth Annual General Meeting of our company. It is stock taking time once again and the year that has passed has been one of the most turbulent in recent times. The second generation of reforms is catching up with us and the hard decisions are being taken, albeit gradually. The pain of structural adjustment of the Indian economy is finally hitting the corporate sector. In our own case, this has meant a slowing down of the fast paced growth of the 90c, when we grew by a very satisfying 37% CAGR. The market realities of today are, however, quite different and as I stand before you, these manifest themselves in a manner which requires us to take a holistic approach. As you have seen for yourselves the first quarter of the current year has not brought any comfort to our industry,For some time now, we have been making representations to the Government about the anomaly in the duty structure whereby fully finished imported batteries are subjected to the same rate of import duty as we pay on import of lead. This inequity needs recognition and correction. The flood of cheap imports, which I had referred to you in my last year's address, has now become a reality. Dumping of good from China, South Korea and Japan were sought to be addressed by a petition for invocation of Anti- Dumping duties. The Government has been very responsive on this matter and imposed an Initial duty after the notification, as required by law. We are now in the process of bringing to the Government's attention, dumping which is taking place through other countries such as Taiwan, Thailand, Bangladesh and Saudi Arabia, Let me assure you that we have no quarrel with import of batteries which come into India at a reasonable price and we are more than confident that your company is well equipped to fight the battle against them in the marketplace. What we cannot do, however is to fight an unequal battle where batteries are dumped at prices which some times do not even cover the cost of production. One of the Pernicious affects of dumping is the pressure that such dumped goods exert on the prices existing in the marketplace. As you are undoubtedly aware, most of these imported batteries have been sold in the replacement market and that is precisely the segment where our margins ar the highest. Inevitably therefore, the dumping in this market has squeezed your company's margins as pries have had to be restructured to meet the onslaught of imported batteries. This has had a debilitating effect on the profits for the first quarter. However, with the imposition of Anti-dumping duty and the pipeline stocks being liquidated, it is expected that matters would improve. There is cause for concern as India's industry continues to show a lack- lustre performance with growth in the past year down to 5% from 6.7% recorded in the previous year. In the current year, the figures are even more dismal and it is the opinion of most authorities that the slow down has primarily been triggered by a severe compression of overall demand in the economy. A CII study also points out that it is paradoxical that inspite of better budgetary control, the economy and industry have not responded. One of the key factors has been the lack of implementation of policies announced and projects initiated. Nowhere is this more evident than in the composition of sales of batteries for industrial applications, that your company manufactures. The infrastructural segment that your company's industrial batteries seek to address, faces a grim scenario, Two successive budgets without any increase in the revenue earnings of the railways, has severely curbed their capacity to purchase new equipment. Thus, tenders have been floated but have not been finalised. Cash crunch and a lack of an adequate transparent policy has also plagued the power sector. The telecom segment is, perhaps, the only exception but severe competition has ensured that prices continue to fall and margins come under pressure in this segment. However, the market for inverter batteries and those required for UPS Systems, have continued to grow at a fast pace and these have provided avenues of growth for your company's products and it is primarily in these, that imported batteries rom China have attempted to wrest market share. The Government of India has notified the battery (Management & Handling) Rules 2001 after a continuous dialogue with the domestic industry and importers. Under these new rules, it shall be the responsibility of the manufacturer, importer, assembler and reconditioner to ensure that used batteries are collected back against sale of new batteries by upto 50% during the first year of implementation, which would progressively increase to 75% and 90% thereafter. The Ministry of Environment & Forests would monitor the entire activity. As I have mentioned to you last year, the intention behind this legislation is laudable indeed, but one which will be difficult and complex to put into operation and would increase the cost of domestic industry at at time when they are already facing severe competition. Even amidst the current scenario, it is a matter of satisfaction to all of us that your company's automotive batteries continue to hold on to their large market share which they had garnered for themselves over the past five decades. Almost all the new motorcars have chosen to place their trust with your company. Motorcycle batteries represent a growing area and your company is now unquestionably the market leader in this segment. The success of Hero Honda's products have had a multiplier effect on the sale of your company's motorcycle batteries. During the year, sale of these batteries grew by over 21% and the first quarter of the current year, carried on the trend. The other thrust area for your company was the tractor market which we have tried to address through our Operation Kissan Scheme. A new distribution pattern has been established for sale of these batteries, to ensure that they reach the farmers for whom they are intended and at the same time expand your company's reach in the rural markets. One of the new markets which hold promise for growth, is the electric vehicle market which intends to bring in a pollution-free vehicle in the metropolitian cities of the country. your company has been working with Mahindra & Mahindra as well as Scooters India with a product to ensure that, clean three-wheelers ply the main arteries of our cities. We hope to eventually develop a battery for four-wheeler applications using the same technology. We live in an era of tremendous changes and there is a need for us to recognise that some of these changes would affect all of us in different ways. The internet is one such medium and we are convinced that if its potential can be harnessed, not only would it represent and alternative and more customer-friendly mechanism to service orders, it would also bring in advantages of integrating our dealers into a close-knit fraternity. Supply- chain management would contribute significantly to cost reduction and a dire3ct relationship with our end-customers would also gradually be established. To achieve these objectives, your company has inaugurated an automotive portal-autoexide.com, which is the first step towards harnessing the power of Information Technology. During the latter half of last year, tumultuous happenings have also taken place in the capital markets. A major fascination with ICE Stocks (I, Communication and Entertainment) has been a global phenomena to which Indian Capital markets have not remained immune. A natural consequence, investor interest in old economy stock has bed limited. We feel that the time has come for the investor community to re-examine the potential of manufacturing companies, particularly, those who have a direct interest in the growth of the new economy. We would like to emphasise that batteries for industrial applications, such as, Telecom and UPS Systems, are directly related to the growth of these two sectors which form part of the new economy, Additionally, Exide is involved in producing batteries for electric vehicles, submarines and solar applications all of which are thrust areas for your new economy, while the other part continues to service the Automobile Industry, which is acknowledged to be a force multiplier. it is our belief that the current stagnation of Indian industry will be corrected over a period of time and those companies who survive would be able to reap the benefits of the new order which will come to stay. Your company's continued investment in Research & Development will give the wherewithal for the continued growth and prosperity of the company. In carrying out this task of managing the change, I would wish to thank my Colleagues on the Board, particularly, our Vice Chairman for their support,guidance and faith. I would also take this opportunity to thank all our employees from the humble worker in the factories to those spanning the entire gamut of corporate services, for carrying on their work unadunted by the temporary setbacks encountered along the way. I would equally wish to thank the Bankers, FIs, Equity Research Analysts and you,our shareholders, for continuing to support Exide in the belief that tomorrow will be a brighter day.