The Rs 850-crore automobile and industrial battery major, which will soon issue shares on a preferential basis to promoters grossing Rs 25 crore, plans to achieve a turnover of over Rs 1,000 crore through Y2K. In a meeting between the company management and analysts in Mumbai on December 7, the former said the company plans to increase turnover by 15 per cent to 17 per cent per annum.

The company plans to get into the high margin area of the replacement battery market which is at present catered to largely by the unorganised sector. The unorganised sector has a market share of 50 per centto 60 per cent in the replacement battery market, whereas the OEMs (the automobile makers who source the batteries to be fitted into new cars) squeeze the margins using their sourcing muscle.

The company management sees itself growing at a faster pace and improving its bottomline further by entering the replacement market. Exide also plans a huge push in the motorcycle segment, one of the fastest growing areas.

Exide aims at replacement market sales of Rs 260 crore this year, against around Rs 192 crore last year.

Overall, the company has witnessed a sales growth of around 60 per cent. Exide, during the first half, recorded sales of Rs 110 crore, compared with last year's Rs 65 crore. Its competitor Amara Raja has sales of Rs 160 crore compared with last year's Rs 135 crore.

The company plans to effect cost cutting measures in the current scenario with less demand to boost and improve margins.

In the automobile segment the company has an average 92 per cent market (ranging from 85 per cent to 100per cent in various segments). Exide has a 100 per cent market share in the submarine segment.

According to Tata Mutual Fund senior analyst Mehul Parikh, who attended the meet, Exide's top line growth is not reflected in the bottomline owing to the high debt to equity ratio of 1.8:1. The company is coming out with a Rs 25-crore preferential issue further diluting equity. Thus, whatever be the earnings, they predominantly go to service the debt. Also, the company's operating margin at 20 per cent is much lower than its competitor Amara Raja batteries of 30 per cent to 35 per cent. So the company needs to improve its operating margins.

According to ABN Amro Asia Securities senior analyst Mohan KR Swamy, the ball regulated lead acid (BRLA) batteries have driven the growth for Exide Industries in the last six to eight months. The plant which went into operation last year and is in full swing this year is getting a favourable response from the railways, telecom, UBS and other sectors.