Each of the three battery manufacturers have their acknowledged strengths. Exide India is the acknowledged market leader in India in the OEM segment for automotive batteries. It holds a 90 per cent market share in this segment. Exide India has a collaboration with ShinKobe of Japan for VRLA battery technology. Amara Raja Batteries has its main strength in VRLA batteries, where it is the undisputed market leader. The company has only recently begun manufacturing automotive batteries in collaboration with Johnson Controls, a leading US-based auto battery manufacturer. Tudor India is not a major player in either segment, though it is a market leader in the replacement market. Even Exide India's brand is second only to Prestolite, the Tudor India brand, targeted at the replacement market. Exide's marketshare in this segment is 30 per cent. Besides the increased foreign stake in the company, Tudor's financial performance has shown signs of improvement. The company continued its first quarter profit earning streak into the second quarter (ended December 1998) as well. Against a loss of around Rs 4 crore last fiscal, the company has reported a net profit of Rs 0.34 crore for the first half in current year owing to better capacity utilisation. There is an anticipation of fastergrowth in the replacement market for automotive batteries than in the OEM segment, in the second half.

In addition, there is a view that with Tudor India now being substantially owned by Exide Corporation, there are improved prospects for export sales to other Exide subsidiaries worldwide. Besides Tudor has initiated moves to enter the lucrative market for VRLA batteries in India, the main consumers are companies in the power and telecom sectors and Indian railways.Discounting likely to improve Reportedly, Essel Packaging (EPL) will buy-back upto 10 per cent of its equity in the first quarter of 1999-2000.

The fact that EPL proposes to buy upto 10 per cent of the equity and it has obtained shareholders approval to buy back equity in the price range of Rs 250-300 is well known. If, as reported, the equity is bought back in the first quarter itself (cash outflow of Rs 38 crore at Rs 250 per share), the discounting will improve dramatically post buy-back, as the RoE will improve substantially (the loanrepayment will result in a reduction in the balance sheet size by Rs 34 crore in 1998-99) and it will be a clear indication of the cash flow for the year. The lower range of the buy-back price is determined and the market price, will not dip below Rs 250. For an investor with a slighly long term view, the current price, it makes a decent buy as reduction in equity will be in a year which will be an excellent one for EPL. The next year is expected to be much better mainly due to contribution from Silvasa unit.

--Aaron Chaze and Urmik Chhaya