S.B. Ganguly, Exide executive chairman and CEO, in Calcutta on Saturday. A Telegraph picture

Calcutta, Nov. 26: Battery manufacturer Exide Industries has decided to focus on the replacement market as its margins in the OEM (original equipment manufacturer) business is taking a beating.

Besides, the company?s market share in the OEM segment, which once stood at 81 per cent, is now down to 78 per cent.

Faced with this double trouble, Exide has decided not to push sales in the OEM market any further. Generally, OEM business works on less than 5 per cent margin as the volume of purchase is high.

The replacement market, on the other hand, yields much higher margin ? close to 20 per cent. Moreover, companies also enjoy a better bargaining power to raise prices in this segment than in the OEM market.

Exide holds a 35 per cent marketshare in the automotive battery replacement segment where the unorganised sector is the formidable force cornering over 50 per cent of the replacement sales.

The unorganised manufacturers have a strong hold on commercial vehicles, tractors and old passenger cars in the replacement market. Within the organised sector, Exide holds a 70 per cent share.

?We are growing by 16 per cent in this segment, while the market is growing by 10 per cent,? S.B. Ganguly, executive chairman and CEO of Exide, said.

Though Exide is a very formidable name in the lead acid battery segment for the last six decades, the company wants to increase its brand visibility given its plan for the replacement market.

The company has roped in cricket star Mahendra Singh Dhoni as the brand ambassador. The two-year endorsement was formally announced on Saturday. As a result, the company?s ad spend has gone up to Rs 15-16 crore from Rs 2-3 crore.

?We are looking forward to more such initiatives,? Ganguly added.