Will invest Rs 100 crore in expansion project

Amara Raja Batteries Ltd is set to double its two-wheeler battery manufacturing capacity with the addition of three more lines at its existing manufacturing base near the temple town of Tirupati.

The company is investing Rs 100 crore in expansion project. This will enhance the manufacturing capacity for two-wheeler batteries from 4.8 million units a year to 9.4 million units by the end of next financial year, said Suresh Kalyan, Chief Financial Officer.

This move will enable the company to get into the original equipment manufacturer business.

Hitherto, the focus was on supplying to the after-market. With three assembly units of the four, the batteries were catering to the after-market. “Now, with the addition of capacity in a phased manner by next financial year end, we will be able to address OE business and supply to the likes of Honda Motor, Hero Motor, Bajaj Auto among other,” he told Business Line.

During the company board meeting last month, it was decided to hike the capacity of the two-wheeler batteries. It is also possible to produce valve-regulated lead acid (VRLA) batteries used in the small UPS for computers, emergency lamps and solar lanterns from the same lines.

EXPANSION PROJECTS

The company, which has four assembly lines for two-wheelers, is poised to complete the expansion of the four-wheeler automotive batteries from 5.6 million units to 6 million units a year by May.

This expansion project was taken up with an outlay of Rs 15 crore.

“We are also in the process of completing the expansion of UPS battery segment from 1.8 million units a year to 3.6 million units a year by September,” he said.

The company is sitting on a cash of about Rs 350 crore and expects to deploy part of these funds and cash flows to meet the expansion project requirements, he added.

Referring to market, Kalyan said, “There is pressure of both two-wheeler and four-wheeler market. But having a diversified business focus, we are able to balance the overall growth.”

The company shares closed the trade at Rs 255.05 up 0.33 per cent.

rishikumar.vundi@thehindu.co.in

(This article was published on December 7, 2012)
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