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| Edited By: KV Ramana |Source: DNA |Updated: Mar 18, 2018, 03:53 AM IST
Amara Raja , a South-based battery major, is scouting for a location to set up a new manufacturing plant and expects to start construction on it in 2012-13.
The company, which has an integrated manufacturing facility near Tirupati in Andhra Pradesh, is almost running out of space for adding fresh capacities.
“We will break the ground for a new facility in 2012-13. Currently, we have all the required manufacturing facilities for industrial, automobile and small VRLA batteries, and plastic components under a single campus. Now, in order to keep up with the demand we are looking at new locations,” Jay Galla, the company’s managing director, said.
“We are also looking at setting up multiple units in multiple locations for each of the products depending on the market situation,” he said.
The company is in the process of expanding its existing facility to achieve a capacity of about 10 million batteries for automotive sector by the current fiscal end.
While it had a capacity to produce 4.2 million four-wheeler batteries, the two-wheeler battery capacity was at about 1.8 million. By the year-end, the company would have a capacity to produce about 5.6 million four-wheeler batteries and about 5 million two-wheeler batteries.
Amara Raja currently derives about 40% of its revenues from the industrial battery segment and the remaining from the automotive.
Johnson Controls, the world’s largest battery manufacturer that holds 26% stake in Amara Raja, provides technical support.
Despite fears of slowdown in the auto sector, Galla said the medium- to long-term indications are strong.
“The OEM production is likely to come down. However, it would come back again once the market stabilises. But it is the replacement market that is important for us and it is still strong,” he said.
He said the company currently has about 25-30% market share in the two-wheeler segment. “The entire two-wheeler batteries are being sold in organised replacement market. We don’t have any OEM arrangement in the sector,” he said.
However, Galla said the first OEM deal in the two-wheeler segment would be signed by year-end.
He said the replacement market in two-wheelers is also growing. “It is a trend now. Because of the electric start bikes, the replacement of batteries is also going to grow,” he said.
