Exide Industries Ltd (EIL) has informed the Bombay Stock Exchange (BSE) that its board will consider a share buyback at its meeting on November 1.
The company has for the first half (H1) of the current fiscal reported higher sales but lower profit over last year. EIL's H1 sales stood at Rs 469 crore against Rs 442 crore last year.
Profit after tax for H1 this year was Rs 15 crore against Rs 21 crore last year.
"The board would decide on the issue keeping in mind the interest of shareholders and creation of value", top company sources said. If the board decided to go ahead, the size and pricing of the buy-back would be finalised along with the financing plan.
Analysts tracking the company said one option that shareholders would like would be fixation of a bottom limit, with a commitment from the company to buy shares if prices dipped below that level.
This would give confidence to equity holders without imposing a large burden, they said.
"As this item on the board's agenda may be considered price-sensitive, the company thought it fit to inform stock exchanges from this stage in keeping with best practices in corporate governance", sources added.
To improve its fortunes, EIL has planned several launches "to shake up the market and get more carowners to buy Exide", said sources. The company has recently launched a Freedom All Terrain Battery (FATB) with 36 month warranty in the premium car segment and a maintenance-free 'Jai Kisaan' high quality battery for tractors.
A new brand called Max would be launched in the value for money segment to compete with poor quality cheap batteries made by the small scale sector. Three more auto sector launches - in the premium, value for money and rural sectors - are in the pipeline. In the second half, the new launches would help the company segment the market and improve margins, sources indicated.
