Credit rating agency Icra has reaffirmed the respective LAA+, MAAA and A1+ ratings assigned to the long term debentures, fixed deposits and commercial paper programmes of Exide Industries Ltd.
The limit for the commercial paper programme has been enhanced from the earlier Rs 75 crore to Rs 125 crore. The rating takes into account Exide Industries' strong market position in all operating segments and a further consolidation of its position subsequent to the acquisition of Standard Batteries Ltd in December 1997.
The focus on volumes, along with successful management of both the Exide and SBL brands, continuous improvement in technology not only for providing superior products but also for streamlining its production and distribution logistics, introduction of products for newer applications and periodic expansion of capacities to achieve economies of scale have helped the company achieve its near monopoly status.
Further, its multi-locational facilities, superior bargaining power with suppliers and diversity of business mix have enabled Exide Industries to protect its operating and net margins even under recessionary conditions. Icra expects these factors to help the company guard against some of the risks inherent in a scenario of increasing competition and cheaper imports.
Besides, Exide Industries has been able to integrate its manufacturing facilities and SBL's manpower in the past year. This is reflected in the improvement recorded in operating margins from 16.3 per cent in 1997-98 to 20.1 per cent in 1998-99.
