Battered batteries

Manish Joshi & Dhruv Rathi

Exide Industries (EIL) has posted a disappointing show in the quarter to September 2001. Topline has remained almost flat at Rs 201.5 crore (Rs 200.4 crore) hit hard by imports from Bangladesh, Thailand and Taiwan. Raw material cost, particularly that of lead has gone up. This is reflected in the consumption of raw material (adjusted for stock) that inched up to 48.9 per cent (48 per cent) of sales. Total expenditure crept up 1.1 per cent to Rs 162.1 crore even as staff cost and other expenditure remained almost stagnant. As a result, operating profit skid by 1.8 per cent to Rs 39.4 crore, which squeezed OPM by around 50 basis points to 19.5 per cent.

PBT before extraordinary items fell 7.5 per cent to Rs 16.4 crore as the changes in interest and depreciation offset each other. However, exceptional items worth Rs one crore comprising mainly amortisation of website development expenses and higher provision for taxation owing to deferred tax of Rs 3.2 crore dipped the bottomline by 12.7 per cent to Rs 12.3 crore.

As much as 58 per cent of EIL’s turnover comes from automotive batteries. Since the OEM market has contracted due to the downturn in the automobile sector, the company has been increasing its focus on replacement market. The company enjoys 11.6 per cent margin in automotive batteries.

Industrial batteries, contributing 42 per cent to the turnover, fetch better margin of 18 per cent. Hence, the company has been trying to improve product mix in favour of industrial batteries. But infrastructure sector comprising power, telecom and railways has been mired in deregulation wrangles and a host of other problems that has hampered growth in domestic demand.

However, the company notched up 70 per cent growth in exports of industrial batteries. EIL is also banking heavily on orders from Indian Navy for submarine batteries, a part of industrial batteries.

JB Chem & Pharma
The sales income of JB Chemicals & Pharmaceutical (JBCP) during the second quarter to September 2001 rose 22.4 per cent to Rs 67.9 crore. The two newly merged companies, Ifiunik Pharmaceuticals and Unique Pharmaceuticals and Laboratories has contributed around 5 per cent of turnover. The major growth has come from the existing operation of the company. Operating profit went up 38.3 per cent to Rs 13.8 crore and the margin improved from 18 per cent to 20.4 per cent. Saving on raw material cost helped the bottomline.

A few products sourced from the merged entity also helped in controlling cost of raw material. A change in product mix did its bit in upping profitability. Lower dependence on DPCO price-controlled products was possible because of greater focus on exports. Net profit also rose by 34.6 per cent to Rs 10.1 crore.

JBCP is keen on monitoring product mix and concentrating on export. The share of formulations has increased considerably to 85 per cent of total sales. The company emphasises high growth segments such as cardiovascular, anti-asthmatic, rejuvenator and anti-ulcerant. In India, these segments are growing at a high rate of plus 20 per cent per annum. In global market, cardiovascular and anti-asthmatic are growing at 10 per cent and 13 per cent respectively. The company is doing its best to make a strong presence in comparatively low growing segments such as anti-parasitic and cold preparations. Top two brands “Nicardia” in cardiovascular segment and “Rantac” in antiulcerant collectively account for 35 per cent of turnover. Export accounts for 47 per cent of sales in 2000-01 up from 39 per cent last year.

The company commenced commercial production of gel and ointments at its Rs 21 crore new project at Panoli from September 2001. This is a 100 per cent export oriented unit, completed three months ahead of schedule. Profit from this project is tax free till next 10 years. Research and development is the backbone of the company.

JBCP boasts thirteen international patents in its kitty. It is also scouting for new acquisitions as well as planning to diversify into herbal products and biotechnology.