The Hindu Business Line : Amara Raja net doubles; 1:5 stock split proposed

Work patterns
Plant for making batteries for 2-wheelers to be production-ready by Oct.
Co intends to put up a plant near Haridwar.
Lead needs set to go up in line with projected production increase.

SEEING GROWTH: Mr Jayadev Galla (left), Managing Director, Amara Raja Batteries Ltd, and Mr Suresh K., Financial Controller, at a press conference in Chennai on Friday. — Bijoy Ghosh

Chennai June 22 Amara Raja Batteries, manufacturers of the Amaron brand of automotive batteries, has reported a net profit of Rs 47 crore for 2006-07, close to double of Rs 23.84 crore for the previous year.

The board of directors has recommended a dividend of Rs 3.50 a share (35 per cent). The board has also recommended a proposal to split the company's shares of Rs 10 each to Rs 2 each.

Amara Raja's turnover increased 67 per cent to Rs 595.80 crore (Rs 363.67 crore).

In the fourth quarter of last year, the company's turnover was Rs 193.60 crore (Rs 109.96 crore). Net profit for the quarter was Rs 15.23 crore (Rs 9.19 crore).

At a press conference here, the company's Managing Director, Mr Jay Galla, said that its upcoming plant for the production of batteries for 2-wheelers would be production-ready by October and the product should be in the market in December. The company expects 2W batteries sales of around Rs 20 crore this year.

The company, which achieved a 92 per cent capacity utilisation of its automotive batteries plant, is expanding its capacity from 4 million now to 5.5 million by the first quarter of next year.

Mr Galla said that Amara Raja intended to put up a plant near Haridwar, Uttarakhand. The company has bought some 20 acres of land there. Initially, it would send assembled batteries from its plant at Tirupati to Haridwar, where acid would be poured and the batteries charged and sold in the Northern markets.

But over time, the plant would be a fully integrated one. Investment details are being worked out.

Price of lead

Amara Raja Batteries imports about 3,000 tonnes of lead each year. This requirement is set to go up in line with the projected production increase.

The prices of the metal have been going up. From $1,400 a tonne at the end of last year, lead prices have gone up to $2,600 a tonne and are expected to rise further to $2,900, although some analysts expects the prices to slide to $1,500 levels from there.

Still, Amara Raja is not much affected, Mr Galla said. In the aftermarket, the company is able to get price increases.

In the OE segment, for about 80 per cent of the company's sales lead prices are underwritten by the buyer. The other 20 per cent is where the company feels the impact, but the appreciation of the Rupee has come in handy. On the overall, lead prices have had a near-neutral impact on the company's sales.

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