Amara Raja Batteries to spend Rs 440 cr for capacity expansion

Written by Sajan C Kumar | Chennai | Updated: Jan 30 2013, 09:11am hrs
Amara Raja Batteries, country's leading industrial and automotive battery major, is planning to invest R440 crore to ramp up capacity in 16 to 18 months. The company 26% equity, each from Galla Family and Johnson Controls, US, will be investing the funds to augment capacities in large valve-regulated leadacid battery (VRLA) and automotive 4-wheeler product lines.

Ravi Bhamidipati, executive director, Amara Raja Batteries, said, To capitalise on growth opportunities ahead, we have decided to invest R440 crore to augment capacities in large VRLA and automotive 4-wheeler product lines over 16 to 18 months. This investment is in addition to already approved capital investment of R304 crore to expand capacities in medium VRLA, automotive 4-wheeler and automotive 2-wheeler product lines.

The company has reported a 23% growth in its profit after tax (PAT) at R80.9 crore for the third quarter against R65.9 crore in the same quarter previous fiscal. The company;s net sales logged a 24% growth at R756.9 crore against R612.4 crore in the year-ago period.

Jayadev Galla, managing director, Amara Raja Batteries, said, The company is keeping a close watch on cost increases due to power shortage, power tariff hike, rising commodity and fuel prices, and volatility in currency markets. The company is confident of its growth prospects and hence continues to invest on capacities and products to support market leading growth in the medium and long term

The company supplies automotive batteries under OE relationships to Ashok Leyland, Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki and Tata Motors. It's industrial and automotive batteries are exported to Asia Pacific, Africa and the West Asia.

The automotive battery business of the company reported a strong double-digit growth, both in volumes and revenue, despite depressed OE demand and capacity constraints in automotive 4W batteries during the third quarter. The strong growth in volumes of 4-wheeler and 2-wheeler batteries was supported by focused action around the brand, channel and customer relationship.

The consumer preference for brand Amaron and PowerZone continues to provide market share gain in aftermarket due to its product offering coupled with endurance and quality. With the aftermarket demand expected to pick up in the financial year 2013-14, the company expects to grow above the industry average in the near future. The company is set to commence supply of 2W batteries to OEMs in a couple of months.

Similarly, the industrial battery business has reported a double-digit revenue growth enabled by improved demand from telecom market and reasonable volume growth, both in telecom and UPS segments. The company could not fully capitalise on the growing demand and preference for its telecom and UPS batteries for want of capacity.