Exide Industries plans to spend Rs 370 crore on capacity augmentation this fiscal in an effort to meet spiralling demand from the domestic market. The automobile battery major had to divert capacity from more profitable replacement market to original equipment manufacturer (OEM) segment because of capacity constraints and the expansion plan is likely to ease the situation.
“We will be investing 370 crore this fiscal. Capacity will be increased to 12 million batteries for four-wheelers and 21.6 million batteries for two-wheelers,” Exide Industries managing director and chief executive officer TV Ramanathan said on the sidelines of the company's 64th annual general meeting here. Now the company produces 10.2 million batteries for four-wheelers and 14 million batteries for two-wheelers.
The shifting of capacity from the replacement market had put pressure on the company's margin too. “Earlier we used to supply 100 batteries to manufacturers as against 150 to replacement market. Now, It has our supply to aftermarket has come down around 120. Our strategy is to regain the earlier ratio which is ideal for a company,” he said.
The capacity expansion is being carried out in all the manufacturing plants including the new facility commissioned at Ahmednagar, Maharashtra for production of two-wheelers. Apart from Ahmednagar, the company has manufacturing facilities in Shyamnagar, Bawal, Taloja, Chinchwad, Hosur and Haldia.
However, according to Ramanathan, pressure on profitability is likely to be continued in the second quarter of the financial year. The company has launched batteries for electric bikes and developing batteries for stop-start micro-hybrid vehicles in collaboration with the Japan's Furukawa battery company. It is also exploring the possibility of developing lithium-ion batteries for the electric vehicle segment.
Speaking on the company's plan for investing in ING Vysya Life Insurance , he said, "We are here for longer term growth. We believe in long-term benefit of shareholders. We got a board approval to invest in ING Vysya. And this year we got board approval to invest up to Rs 150 crore," Ramanathan added.