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Published: Dec 15, 2022
Updated: Dec 15, 2022
Amara Raja Batteries (ARBL), one of India’s leading industrial and automotive battery majors, has signed a memorandum of understanding (MoU) with the government of Telangana to set up a state-of-the-art research and manufacturing facility for lithium-ion batteries in Mahbubnagar district.
While announcing this major development, Jayadev Galla, Chairman and MD of the company, said “We intend to invest over Rs 9,500 crore over the next ten years. This strategic partnership with the Government of Telangana is a giant leap for Amara Raja and will bring in the impetus for innovations in sustainable technologies for the whole region, in addition to generating employment opportunities. We have had a long association with the state and are excited to finally have the opportunity to establish an industrial base here.”
Giving a little more insight about the proposed project, Vikramadithya Gourineni, Executive Director, New Energy Business, said “This latest step is in line with the ‘energy & mobility’ roadmap that we laid out last year. Our ambition is to develop a robust Indian ecosystem with research & development, incubation, testing and manufacturing – a Giga Corridor for emerging technologies in energy & mobility.”
Congratulating the company on the occasion, KT Rama Rao, Minister for Industries and Commerce, IT, E&C and MA & UD, said, “Telangana has been a frontrunner in adopting sustainability and it is a proud moment for the state to welcome the country’s largest ever investment in the lithium-ion cell manufacturing sector. Our aim is to become the most electrified state in India, and having a giga factory in Telangana further strengthens our aspiration to become an EV manufacturing hub and spearhead the EV revolution in India.”
ARBL is a supplier to major telecom service providers, telecom equipment manufacturers, the UPS sector, Indian Railways and power, oil & gas players, among others. The company is also a leading manufacturer of automotive batteries under the brands Amaron and Powerzone, having a pan- India network.
The company supplies automotive batteries under OE relationships to Ashok Leyland, Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki and Tata Motors. Its industrial and automotive batteries are also being exported to countries in the Indian Ocean Rim.
The incorporation of a wholly-owned subsidiary for Liion cell manufacturing will set the ground for larger investments and technical collaboration. The subsidiary will also bring in the required focus and house the new energy investments. The company remains committed to growth both in the lead acid and new energy business.
On a consolidated basis, the company reported a revenue of Rs 5,362 crore in the first half of the current financial year against Rs 4,150 crore in the corresponding period of the previous year. PAT remained at Rs 333.23 crore vis-àvis Rs 268.42 crore, translating into EPS of Rs 19.51 (Rs 15.71 in PY). An interim dividend of 290% per equity share has also been announced. ARBL has an equity capital of Rs 17.08 crore (Face Value Re1) with shareholders’ reserves at Rs 4,535.40 crore. The promoter group holds 28.06% stake and the remaining 71.94% is spread amonst 5,48,432 public shareholders.
Commenting on the company’s Q2/H1 financial performance, Harshavardhana Gourineni, Executive Director-Automotive & Industrial Business, said, “The company witnessed robust demand in the automotive sector from the aftermarket as well as OEM segments. Exports showed very healthy growth in the Middle East and South East Asian markets. Industrial battery volumes continued their upswing, especially in the telecom segment driven by 5G rollout preparations in India. We have rebounded from the cost pressures of the previous quarters and have grown the business across verticals. We are optimistic that economic drivers will remain stable in the near future.”
ARBL has accounted Rs 109.71 crore as the fair value gain in other comprehensive income (net of tax) on its existing investments in Log 9 Materials Scientific Pvt Ltd. The company has also made an additional investment aggregating Rs 77 crore in Log 9 Materials during the quarter ended September 2022. In other words, out of the earned income of Rs 109.71 crore, Rs 77 crore has been reinvested in the same entity.
Log 9, a company with its new headquarters and R&D centre in Bangalore, is engaged in new, innovative technology-based products. It has developed India’s first air fuel cell, rapid charge technology for EVs, rapidx 6,000 batteries for three- wheelers, and special application batteries, to mention a few. The company has collaborated with IIT Delhi, IIT Mumbai, IISc Bangalore and CSIR Labs in addition to being a member of ‘India Energy Storage Alliance’. Importantly, Log 9 is closely associated with NITI Aayog for drafting the national policy on niche advance chemistry cell manufacturing.
The company has approved a scheme of arrangement amongst Mangal Industries (MIL) and ARBL, which provides for demerger of the plastic component for battery business from MIL into ARBL. Consequently, upon receiving all necessary approvals, equity shares of ARBL will be issued to the shareholders of MIL as per the share entitlement ratio defined in the scheme.
Since 2021, ARBL is facing the closure orders from the Andhra Pradesh Pollution Control Board for the company’s plants situated at Karakambadi, Tirupati and Nunegundlapalli village, Chittor district in AP. The matter is not yet resolved. However, the High Court of Andhra Pradesh has extended the interim suspension of the closure orders several times. ARBL has stated that they have always accorded the highest priority to the environment, health and safety.
Though ARBL has not yet made public, the sources to finance its most prestigious project of Rs 9,500 crore for lithium-ion batteries, it could be safely concluded that the management is quite capable of raising funds, as it enjoys a sound track record. Moreover, the company is almost debtfree as on date.
February 15, 2025 - First Issue
Industry Review
VOL XVI - 10
February 01-15, 2025
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