Thursday, August 22, 2013: Owing to the strong presence of Amara Raja Batteries (ARB) in the aftermarket passenger vehicle and industrial battery segment, the company has managed to de-risk its business from the slump in the automotive industry and the economy at large. Contrary to the decreasing sales volume of original equipment manufacturers (OEMs) of passenger and commercial vehicles, ABP saw 28 per cent revenue growth in the quarter to June.
The company was able to achieve a good earning margin of 16.4 per cent for the quarter due to twice increase in price in the passenger car aftermarket along with cost rationalisation measures that led to a contraction of 80 basis points in the company’s expenditure.
The ARB annual report points out that it garners nearly 60 per cent of its top-line from the sale of automotive batteries and in the aftermarket segment, it commands a share of 22 per cent in four-wheeler battery and 15 per cent in the two-wheeler battery segment, only next to Exide, the market leader.
The firm has recently commenced supply of two-wheeler batteries to Honda Motors India for their OEM plant in Karnataka. With a view to focus on Indian Ocean Rim, it is also considering to expand its business in the export market. Moreover, it has realized 90 per cent of its capacity for four-wheeler batteries and 76 per cent for two-wheeler batteries, so, capacity challenge is a major challenge for ARB.
For capacity expansion, nearly Rs 7 Billion will be invested that is meant for industrial as well as automotive battery segments. Annual report states that it will be funded with the help of surplus cash on its books, estimated internal accruals in the Financial Year 2014 and through moderate debt supposed to be raised by the company.
