The Hindu Business Line : PitStops for growth

Amaron has set up a two-tier system involving distributors and retailers. The company's franchisee outlets, styled PitStop (racing terminology for service during competition for fuel, tyres, chassis adjustments and mechanical problems) are the main distributors. They also retail batteries to consumers.

"The Amaron PitStop is one of the ways through which Amara Raja reaches out to its customers to give them a complete experience of the brand through its ambience, modern technology and attention to the customers' needs. They also serve as authorised collection centres for used batteries. This initiative helps control environmental hazard caused by unauthorised backyard smelting," says Indeevar.

Elaborating on the company's recycling initiatives, he said the collection of used batteries is a critical step in controlling backyard smelting by scrap merchants. According to him, to ensure a higher level of customer satisfaction, operations at Amaron PitStops are directed by standardised distribution and service programmes based on consumer research, which is being monitored by the company through regular feedback and training.

Breaking the traditional way of retailing automotive batteries only through battery outlets, Amaron identified all automotive retail outlets as potential points of selling.

"We retail our products through tyre shops, garages, service stations, spare parts outlets and petrol bunks too." The company entered into a tie-up with BPCL to sell its batteries in BP Ghar outlets. "We now have 130 PitStops catering to over 12,000 retail outlets across the country," says Indeevar.

These PitStops are also connected through a toll-free call centre number and geared to offer doorstep service to customers. In addition to that, it has also established a 750-strong service hub network to extend service facilities to remote areas.

The company is an exclusive OE supplier to auto majors such as Ford, Daimler Chrysler, Swaraj Mazda and Maruti (for Swift), and a preferred supplier to companies including Ashok Leyland, Fiat, General Motors, Hyundai Motors, Honda, Mahindra & Mahindra. Amaron has seen 61 per cent year-on-year growth in this segment.

Exports account for 10 per cent of the company's automotive battery revenue. It exports to several countries in the Asian region including Singapore, Sri Lanka, Malaysia, the Philippines, Dubai, Kuwait, Nepal, China and Bhutan.

"Now, Amaron is the largest aftermarket brand in Singapore," exults Indeevar. Targeting a pan-Asian presence, the company is also exploring the possibilities of exporting to Japan. "The competitive pressure and drop in realisation resulted in a slowdown in earnings growth for Amara Raja in the past few years. The entry of Amara Raja into the automotive battery market and the inroads it made into the OE and replacement market has helped the company stage a resurgence," says a Mumbai-based analyst. The expansion of the retail distribution network, along with fresh orders from Maruti, for Swift in particular, has had a positive impact on the company's performance.

The expansion of product base in the VRLA (valve regulated lead acid) segment has also helped, he says. According to the analyst, Amara Raja's agreement with third parties for manufacturing batteries has helped the company maintain volume growth, which is quite critical in the battery market.

Mr G. Indeevar, Head (Automotive after market), Amara Raja Batteries.

"The implementation of stringent environment norms pertaining to battery recycling would ensure better volumes in the replacement market for the players from the organised sector," he said.

The competition in the Indian market is getting even more fierce with Tata AutoComp Systems Ltd (a Tata group company), in a joint venture with GS Yuasa International Ltd of Japan, all set to manufacture automotive batteries in India for OE and aftermarket segments, and Minda Industries Ltd entering a tie-up with FIAMM S.p.A of Italy.

Amara Raja Batteries, with technical support from its 26 per cent equity partner, Johnson Controls of the US, manufactures a range of automotive and industrial batteries. Automotive batteries account for 55 per cent of the company's revenue. It recently launched a new range of batteries for all vehicles — Amaron Pro — with 48-month warranty as opposed to the industrial standard of 12 months. It also has other ranges such as Amaron Hi-Life with 36-month warranty and Amaron Go (18-month) and Amaron Fresh (12-month).

At present, Amaron is second in the replacement market in the country. "We are aiming to gain market leadership by 2010," says Indeevar, adding for good measure, "Maybe we are a distant second now, but we are racing ahead with 76 per cent year-on-year growth."

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