The fact is that the company has maintained its growth rate into the last quarter as well, spurred on by the additional capacities belonging to Standard Batteries. Lead prices at a seven-year low helped improve operating margins. For battery manufacturers, lead is a significant cost head (at least 45-50 per cent of sales is represented by the cost of lead). Besides the obvious benefits from lower raw material prices, Exide has improved its margins by cost reduction as well, which has been well-appreciated.

Further, in the current year, it has announcedits intention to increase its exposure in industrial batteries, which carry significantly higher margins. The case of Amara Raja Batteries can be highlighted, which earns margins in excess of 35 per cent, by virtue of dominating the VRLA batteries segment. But rising global lead prices, which have been forecast to rise further might act as a dampener in the current year.

For the current year, the market seems to be betting on the fact that the OEM segement, which Exide dominates, will be worse than the last year. But analysts feel that like the other players in the automotive battery segment, Exide will also have to concentrate on the replacement market (which has been growing at a faster rate). But Exide has also announced its intention of becoming a major player in industrial batteries, especially since it now has Standard Batteries capacities at its disposal. The benefits from the industrial batteries business will be seen immediately in the operating margins, even though competition is getting fiercehere as well. The trend in the batteries industry has been of segment leaders moving into each other's territory. For example, Amara Raja (after Johnson Controls took a 23 per cent stake) is moving into automotive batteries in a big way, Exide on its part is moving into industrial batteries, an area which is dominated by Amara Raja. Tudor India has also begun to get active in the automotive replacement market, once again a segment dominated by Exide India.

Great Eastern Shipping
The decision of the Great Eastern Shipping board of directors to go ahead and reduce the equity share capital as part of the restructuring exercise is a welcome decision. When the possibility of the company demerging its real estate division was first mentioned in end-March, there was also a mention of a possible buy-back of shares. But since the demerger will be accompanied by a proportionate reduction in equity, a buyback of shares to the extent of 10 per cent of the outstanding equity will be effected at no cost to thecompany, which has to be seen positively. But the fact that there will be a reduction in the equity share capital of Gesco was obviously not enough to cheer the market for the stock. The stock slumped further in the aftermath of the last quarter results, before recovering a little.

There are a couple of reasons for this development. First, the last quarter performance has been far worse than any of the earlier quarters, which indicates a continuing deterioration in the business fundamentals. Revenues dipped y-o-y for the first time in 1998-99. Second, the reduction in the equity dividend, though expected, was harsh (but the stock still offers an attractive equity yield of 11 per cent). And third, the outlook for the immediate future appears to be bleak as was indicated by the management. The growth in profits from the offshore divisions has begun to slow, though these are still very impressive. However, the full impact of the fleet restructuring will be felt in the current year. The company has reduced thenumber of ships engaged in carrying dry bulk cargo further in 1998-99 and has increased its strength in the crude oil carrying business, which has a greater potential in the Indian market.