Nearly two years ago, after the economic slump of 2009, the automobile sector was booming. Sales of new cars, in particular, were registering unprecedented growth. Demand for automotive batteries picked up so fast that we struggled to meet the requirements of car manufacturers. Since the OEM (original equipment manufacturer) tie-ups are a long-standing business, we decided to cut down on replacement volumes due to capacity constraints. Our market share in the replacement segment fell to 25 per cent from 35 per cent before.
In 2011, we went for capacity expansion for both four-wheelers and two-wheelers. This enabled Exide to focus on the replacement market. We have invested close to Rs 600 crore on capacity expansion. Our current capacity is 12.2 million batteries for four-wheelers and 22.8 million batteries for two-wheelers.
Now, there's a reverse trend in the market. We have capacity in place, but demand from the OEM segment is down. Weak economic activity is slowing down demand for new cars whereas the replacement market continues to grow at a robust 15 per cent. Replacement demand growth is directly linked to OEM growth but with a lag of three years. The automobile sector grew tremendously in 2009/10 and 2010/11. This is resulting in higher demand in the replacement segment now.
With market fundamentals changing, we are trying to go back to previous market share levels in the replacement segment. Since the last financial year, we have started regaining market share. Our market share currently stands at more than 30 per cent.
Besides, we have been analysing our strengths and weaknesses on a regular basis. The distribution network is our strength but we want to consolidate it further. We are getting into new markets such as rural and semi-urban areas where battery consumption is low.