Amara Raja Batteries Limited has sewn up a plan to significantly expand capacity for its two-wheelers, automotive batteries and for various industrial applications, even as it steps up exports to countries in the Indian Ocean Rim and Middle East.
Ramachandra Galla, Chairman of ARBL, said, “The two-wheeler battery manufacturing capacity of 11 million units per annum is likely to hit capacity constraint by the current fiscal end, and we would need to plan for capacity addition to meet future requirements.”
In order to meet the requirement of supplies to Original Equipment Manufacturers, and also the aftermarket, the company is considering another manufacturing plant with a capacity of over 11 million units per annum, more than doubling the current installed capacity for two-wheelers.
Speaking at the company’s second manufacturing base in Chittoor (the other one is located close to Tirupati also in Chittoor district of Andhra Pradesh), Galla said the company would have to plan at least 18 months ahead to meet the requirement for two-wheelers, which would hit full capacity later this year.
Last fiscal, the company invested Rs. 550 crore and is planning a capex of Rs. 600 crore in 2015-16.
Responding to a query, Galla said the Amara Raja Group is aiming at a turnover of a billion dollars (about Rs. 6,200 crore) by next financial year. Its business spans batteries, food processing, electronics and plastic moulding among others.
With both the manufacturing plants located in South, the company is also evaluating a couple of locations in the northern and western regions for setting up a plant. However, no decision has been taken on this as yet, he said.
To increase exports
The second largest batteries manufacturing company in the country, recently commissioned a 3 million units per annum automotive battery plant, which has capacity to further increase it to 8 million units per annum. With the new three million unit per annum automotive battery plant, the current installed capacity has touched 10 million units per annum of automotive batteries.
The company plants located in two industrial complexes together have more than 90 per cent capacity utilisation. With the new capacity coming up for two-wheelers, automotive, it is proposed to further increase the exports to other markets, he explained.
All the batteries segments of the company spanning, automotive, two-wheeler and industrial, the later including telecom, UPS and IT sector, have witnessed growth in spite of tough market conditions. The long term engagements with OEMs such as Honda, Ford and other automotive companies, and Honda, Mahindra and Hero and Bajaj likely to be inducted soon provide steady business, apart from strong after market, he said.
The company also manufactures for other brands (private labels), these include Bosch, Lucas TVS, AC Delco, Trustart (Cummins), in all aggregating over one million units per annum. This is also likely to go up.
On Wednesday, Amara Raja shares ended down 2.6 per cent or Rs. 21.40 at Rs. 803 on the BSE
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